The market was mixed today, with the Dow losing 13 points and the Nasdaq advancing 21 points.
Our market timing indicators remain positive, so we remain overall bullish, but we are seeing some wild moves both up and down among some of our stocks.
Today, we saw both Exact Sciences and Five Below take big hits after delivering solid pre-announcements of fourth quarter sales. For Exact Sciences, growth remains rapid, but after a nice pop to start the year, the stock collapsed today on its largest volume in months, finishing the day below support. Yes, the story is solid, but after a big, prolonged run last year, the stock’s action during the past two months tells us big investors are looking elsewhere. We sold half our shares about a month ago and advise selling the rest here.
Five Below said that sales would be near the top of its prior guidance, which wasn’t enough for some big investors. Even so, the stock remains above support, and we’re watching things closely. We’re going to stay on Buy for now and see how shares react in the days ahead.
Most of our other stocks are acting just fine, but as we wrote last week, January is often volatile and tricky, so when putting money to work, try to do so on dips or after a consolidation.
All in all, our sale of Exact Sciences will leave us with a cash position of around 16%. The Model Portfolio will be left with 10 stocks, six of which are rated Buy. They are Diamondback Energy, E*Trade, Five Below, Grubhub, ProShares Ultra S&P 500 Fund and Universal Display. We’ll keep Alibaba, Facebook, PayPal and Shopify rated Hold for now, but all are showing signs of resuming their uptrends.