The market suffered another huge wave of selling today, with the Dow cascading 1,033 points and the Nasdaq plunging 275 points.
The major indexes are testing their Tuesday lows, but the intermediate-term trend is clearly down and the sellers are punishing many stocks. A short-term bounce could start any time, but it’s important not to be complacent and work to raise cash by selling losers or taking partial profits.
Tonight, we’re going to boost our cash position by selling one-third of our shares in both Facebook (FB) and ProShares Ultra S&P 500 Fund (SSO), and by selling our entire position in E*Trade (ETFC), which is now showing us a tiny loss. These sales will lift our cash position to around 43%.
Back to the market, we continue to believe the odds strongly favor that the overall bull market is intact and will eventually resume. But with the intermediate-term trend pointed down, it’s best to build some cash and cut back on new buying.
In the Model Portfolio, we have Shopify (SHOP) and Splunk (SPLK) rated Buy, but it’s best to keep new positions on the small side until the market stabilizes. We now have Hold ratings on Alibaba (BABA), Five Below (FIVE), Grubhub (GRUB), PayPal (PYPL) and our remaining shares of Facebook and ProShares Ultra S&P 500 Fund.