Growth stocks imploded again today as buyers were nowhere to be found. At day’s end, the Dow did lose 144 points, but the Nasdaq collapsed another 107 points and more leading stocks cracked intermediate-term support.
Our Cabot Tides are now on the fence, as the recent selling has driven small caps, mid caps and the Nasdaq to, or slightly below, their 50-day lines. Moreover, leading stocks have flashed a lot of abnormal action, with many stalling out for five weeks before the recent wave of intense selling.
Moving forward, we’re open to anything. We do believe there’s lots of evidence that points to leading stocks now being in a correction phase, but many names are still holding support and a good couple of days would make a world of difference. As always we just go with the evidence, and the rash of abnormal action tells us to cut back on new buying and raise some cash.
On a Special Bulletin this morning, we sold our position in Proofpoint (PFPT) due to the stock’s toppy action in recent months and big-volume, earnings-induced selloff last Friday. And after today’s selling rout, we’re going to sell Nutanix (NTNX), which has broken below its prior low and is showing us a loss.
We’ll also place PayPal (PYPL) and Teladoc (TDOC) on Hold given their recent slides.
We now have seven stocks in the Model Portfolio and a cash position of around 42%. We still have Grubhub (GRUB) and Ligand Pharmaceuticals (LGND) rated Buy, but we advise keeping new positions on the small side.
Stocks rated Hold are Five Below (FIVE), PayPal (PYPL), Shake Shack (SHAK), Teladoc (TDOC) and Okta (OKTA), which slid sharply today but remains a bit above its prior low and our stop.
Your next scheduled message is next Wednesday, August 1 at 5 pm, though as always, we’ll send a Special Bulletin if we have any more changes. Thank you very much.