What To Do Now: We’re taking partial profits in Okta (OKTA), selling one-third of our shares, and placing Twilio (TWLO) on Hold. The Model Portfolio’s cash position will now be around 12%.
The major indexes were mixed today, with the Dow up 29 points and the Nasdaq down 37 points. But growth stocks were under pressure, as most of the dynamic leaders of this year fell sharply in heavy volume.
Of course, one day of action isn’t the end of the world, and to be fair, very few leading growth stocks have broken key intermediate-term support, so it’s hard to get too negative. But when combined with some huge runs in recent weeks (as well as, in some cases, a little stalling action since mid June), our antennae are up.
We’re not advising any major changes tonight, but we are making one small move, changing a rating and keeping our eyes open going forward.
The one move will be booking partial profits in Okta (OKTA), selling one-third of our shares and holding the rest. Ratings-wise, we’re also going to put Twilio (TWLO) on Hold, as the stock has repeatedly failed at resistance near 150 and came under pressure today. (Earnings are due out Wednesday evening.)
FYI, as for Coupa (COUP), we’ll stay on Buy, as the stock “only” dipped to its 25-day line today and still looks fine. But as a heads up, our profit topped 20% last week, and one of our rules is to not let a gain like that turn into much of a loss. Thus, we’ll use a mental stop on COUP in the low 120s (our cost basis is near 123).
The partial sale of OKTA will leave the Model Portfolio with around 12% in cash. We still have 10 stocks in the Model Portfolio, with most rated BUY—they are Blackstone, Coupa, Chipotle, Elastic (buy a half), ProShares Ultra S&P Fund, Snap and Zillow (buy a half). Planet Fitness, Twilio and our remaining shares of Okta are now rated HOLD.
Your next scheduled message is this Thursday (August 1), when we’ll be sending the next issue of Cabot Growth Investor.