Keep Trimming
Yesterday was an ugly day as the Nasdaq got off to a good start and was up more than 2% then faded, with the selling accelerating into the close. The index ended the day down more than 1% and today is toying with the somewhat critical 14,000 level.
What’s different now is that the dips that had been bought ever since the market bottomed in March 2020 are now flooded with crickets. Nobody is buying. That’s driven many stocks to repeatedly take steps down at levels that “should” have held. While it seems that we should be at, near, or even past a level of support in many names, the deeper the decline the greater the risk that more money will be pulled out, at least in the short-term.
As always, the pendulum swings too far.
Today we’ll heed the risks and take our exposure down even further, starting with a few of our most banged-up positions.
First to be sold is Coinbase (COIN), which has fallen to a post-IPO low as cryptocurrencies sell off. More active trading in crypto could be a boost, but if the damage there is large enough trading volumes throughout 2022 could be lower than we expect. Bottom line, the stock’s not working and we need to protect ourselves. SELL
We’ll also step away from the rest of our position in Global-E (GLBE). We sold half yesterday and with the benefit of less than 24 hours of hindsight (a poor joke) we should have just stepped away completely. This one stings. I think there’s potential for a more formal tie-up between Shopify (SHOP) and GLBE and selling out now takes us out of position to benefit from a stock that could have a massive snapback rally when buyers come back into the market. But again, we need to protect ourselves. SELL SECOND HALF
We will also sell out of a few names that we’ve previously taken partial profits on.
First up is Upstart (UPST), which is dipping below a recent support zone today. We made good money on this name and I don’t want to let our last quarter position drift even further. SELL FINAL QUARTER
We will also sell the rest of our position in Kornit Digital (KRNT), which has failed to have an up day in several weeks. Our partial gain on this three-quarter position is around 22%. SELL REST
We’ll stop there. These sells will reduce our portfolio to the smallest number of positions we’ve had in some time, and it’s possible we’ll trim even more in the near future.
On the flip side, my watch list is growing as I’ll continue to monitor all of these positions.
Big picture, we’ve moved on from the aggressive stance that worked so well in 2021 (average gain of 41% on 85 full and partial positions, including four with gains over 200% and 13 with gains over 100%) and toward a much more conservative stance.
In short, we want to be in a position to put money to work when the odds are in our favor once again.