The market took a big hit on Friday as fears of higher rates roiled the market. Today, however, the buyers showed impressive strength, recouping a good chunk of Friday’s decline. At day’s end, the Dow had risen 240 points while the Nasdaq surged 86 points.
Our Cabot Tides are now on the fence, as most indexes are hovering just below or just above their respective 50-day lines. The good news is that the longer-term trend remains clearly up, and our Two-Second Indicator is in good shape, with just 22 new lows on Friday and only 32 today, so the broad market is still healthy.
As for leading stocks, some have cracked, but far more have pulled back normally and found solid support today.
All together, the evidence has worsened a bit, and it’s fair to say the intermediate-term trend is mostly sideways. But given the other positives and the fact that the Model Portfolio already has 22% in cash, we’re not making any major moves tonight.
We will, however, place ProShares S&P 500 Ultra Fund (SSO) on Hold to respect the message from our Tides.
Going forward, we’ll simply follow the market’s lead. If Friday ends up being a one-day shakeout, we’ll look to put the rest of our cash to work as stocks rev higher. But we’re also keeping a handful of stocks on relatively tight leashes should the sellers re-emerge in the days ahead.
Right now, though, we remain bullish, with eight stocks in the Portfolio, including six that are rated BUY. They are Abiomed, Alibaba, Amazon, Facebook, GrubHub and Veeva Systems. Stocks rated Hold include ProShares Ultra S&P 500 Fund and Ulta Beauty.