Cabot Growth Investor Special Bulletin
The market was brutalized again today, with another avalanche of selling after yesterday’s disappointing Fed rate hike and press conference. One of our positions fell through support and it’s time to sell. This leaves use with two positions and 84% in cash in the model portfolio.
The market was brutalized again today, with another avalanche of selling after yesterday’s disappointing Fed rate hike and press conference. At today’s close, the Dow was down 464 points and the Nasdaq tumbled 108 points.
Obviously, the trends remain sharply down, though after a 10%-plus fall in the major indexes during the past three weeks, we’re seeing not just bearish sentiment readings but some historic oversold readings as well—today, for instance, new lows as a percent of all stocks trading on the NYSE and Nasdaq was the ninth-highest of the past 35 years.
That said, while a bounce from here wouldn’t be surprising, it’s not about trying to predict what comes next. We’re trend followers, so as long as the market is trending down we will advise remaining in a heavily defensive stance.
Tonight’s special message concerns Exact Sciences (EXAS), which dove below support during today’s market meltdown and is forcing us to sell. We gave the stock some extra rope given our already-huge cash position, but that was the wrong move, as the pressure of the market proved too much and we don’t want to let a bad situation get any worse.
Tonight’s sale will leave us with around 84% in cash. We’ll continue to hold our positions in both Five Below (FIVE) and Twilio (TWLO) for now, keeping both on tight leashes, but the bigger piece of advice is to remain heavily defensive until the buyers make a stand for more than a few days. We’ll move both stocks to Hold ratings at least until the market stabilizes.
While there’s little to get excited about today, it’s important to keep in mind this decline is setting up the next big advance by the market and new individual leading stocks. But the more money you preserve today, the more money you can make once the next bull move gets going.