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Growth Investor
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August 3, 2022

It’s not 1999 out there, but the market and individual stocks continue to repair the damage from the past few months. Today, we’re going to add a half-sized stake in Enphase Energy (ENPH), leaving us with around 70% in cash.

WHAT TO DO NOW: It’s not 1999 out there, but the market and individual stocks continue to repair the damage from the past few months. Today, we’re going to add a half-sized stake in Enphase Energy (ENPH), leaving us with around 70% in cash. We could have another new addition or two (or, ideally, average up in one of our current names if it reacts well to earnings), but today we’ll nibble on ENPH and go from there.

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The market is up again this morning—as of 10 am EST, the Dow is up 184 points, and the Nasdaq is rallying 167 points.

The major indexes and many stocks have been acting reasonably well since the Cabot Tides buy signal of a couple of weeks ago. The rub remains that the major indexes are certainly acting better than most potential leaders—there’s little doubt that most of the action has been from off-the-bottom stocks (names still miles below most moving averages), while many names that poke above resistance quickly find some sellers. Combine that with some key secondary indicators (Two-Second Indicator and Aggression Index) and it continues to tell us to go slow.

However, as we wrote in last week’s issue, that’s not to say the action is negative—up is good, first of all, and we are seeing a few more resilient names begin to stretch higher. Clearly, it’s not 1999 out there, but we’re going to extend our line a bit more tonight and then see how things go from here.

Today, we’re going to take a nibble at Enphase Energy (ENPH), which is probably the one growth stock that looks classic in terms of is breakout and followthrough on big volume in recent days—as well as terrific fundamental numbers and a great story. The stock was yanked down today as a peer was nailed on earnings; we think it’s worth the risk of adding a half-sized stake on this drop, but as a heads up, we’ll be using a very loose leash here (about 20% from our entry point) to give ENPH room to maneuver. BUY A HALF

We may add another half-sized stake or two—or, ideally, average up in one of our current names if it reacts well to earnings going ahead—but we’ll put a little money to work in ENPH today and go from there. Our cash position will now be around 70%.

Don’t hesitate to email me directly at mike@cabotwealth.com with any questions. We’ll have our regularly scheduled update tomorrow (August 4) with further thoughts and updates on all of our positions.