The major indexes finished mixed today, with the Dow rising 141 points and the Nasdaq dropping 4 points.
It remains a strong bull market, but below the surface, there are many crosscurrents, as some stocks run into trouble and others pile on big gains. Tonight’s message is regarding Universal Display (OLED), which we placed on Hold in last night’s update because of its sharp decline. Today, despite another decent day in the market, the stock tacked on more losses on big volume.
It’s possible that the stock will recover. But taking a step back, Universal Display has enjoyed a tremendous run, and after looking like it was getting going earlier this month, the stock has come under severe distribution. This week is likely to bring big losses in the stock’s heaviest volume in nearly three years.
There’s a good chance that a top is in for a while, so we’re selling the rest of our shares tonight, taking the rest of our profit and looking elsewhere.
Tonight’s sale will leave the Model Portfolio with around 22% in cash, which is too high given the environment. We don’t see any great buys at the moment, so we’ll sit tight tonight, but we expect to add a new stock or two next week, especially if the market remains firm.
The OLED sale will leave us with nine stocks in the Model Portfolio, six of which are rated Buy—they are Diamondback Energy, E*Trade, Five Below, PayPal, ProShares Ultra S&P 500 Fund and Shopify. We now have Hold ratings on Alibaba, Facebook and Grubhub.