Growth stocks took another massive hit today, as money rotated to safer areas. At day’s end, the Dow was up 123 points, but the Nasdaq fell 38 points and leading stocks were trashed.
Our Cabot Tides remains on the fence, growth-oriented indexes have either already broken down or, in the case of the Nasdaq, are looking iffy. More important to us is the action of individual stocks, many of which are now flashing abnormal action after big, multi-month runs.
None of this is to say the bull move in growth stocks is over and done with, or even that the market is about to embark on a painful correction. We continue to have conviction that the overall bull market has room to run, but after big advances, there’s no question the evidence has worsened, which means it’s prudent to pare back.
In a Special Bulletin this morning, we sold our position in PayPal and placed Dexcom on Hold.
Tonight, we’re doing a little more selling—we’re going to take partial profits in both Teladoc (TDOC) and Ligand Pharmaceuticals (LGND), selling one-third of our stake in each.
From here, we’re open to anything. Continued selling pressure will likely have us raising some more cash, but many growth stocks are building decent launching pads, so if the buyers return, there should be plenty of opportunities to jump on.
All told, in the Model Portfolio, we now have eight stocks but our cash position will now be around 29%. We’ll keep Autodesk (ADSK), Five Below (FIVE) and Okta (OKTA) rated Buy, though it’s best to keep new positions small until things stabilize. We now have Dexcom (DXCM), Grubhub (GRUB), Neurocrine (NBIX) and our remaining shares of Ligand Pharmaceuticals (LGND) and Teladoc (TDOC) rated Hold.