Today brought a wave of selling that took the major market indexes (and most of the stock in our portfolio) down a peg or two. Despite the selloff, most of our stocks remain in their recent trading ranges and look like they will do just fine unless the market takes another leap off the end of the dock tomorrow. iShares MSCI Emerging Markets ETF (EEM), which is the basis for the Cabot Emerging Markets Timer, is still above its 50-day moving average, but today’s gap down looks like a potential warning shot.
I am taking two actions in response to today’s market weakness. First, I will move Sociedad Quimica y Minera (SQM) to a Hold rating. The stock has been down substantially in three of its past four trading sessions, but it’s still holding well above its rising 25-day moving average, which is now just below 51. This is a precaution in response to a substantial down move. HOLD.
The second action is to sell Vedanta (VEDL), which the portfolio bought at 21. The loss is an acceptable 8.3%, but the stock was off 2.3% today and has booked three days of declines on heavy volume this month. I don’t like it that the stock is sitting exactly on top of its 50-day moving average (18.79 at the close) and that it finished the day at the bottom of its daily trading range. It’s still a good story, but I think it’s important to give this market correction due respect. SELL.
There are no other changes today. The scheduled weekly update for Cabot Emerging Markets Investor will come out on Thursday, but if I see anything that needs rapid action, I’ll send another Special Hotline before then.