WHAT TO DO NOW: The market remains in a normal consolidation phase, and most of our stocks look fine. That said, today, we’re kicking the black sheep out of the Model Portfolio—MasTec (MTZ) has been unable to get off its knees since its unusual decline a couple of weeks back. We’ll sell and hold the cash for now.
Today’s Action
The market is inching higher as of 11 am eastern time, with the Dow up 26 points and the Nasdaq in the green by 25 points.
When it comes to the overall market, our thoughts haven’t changed much from last week’s issue—it’s a bull market (our market timing indicators look good), and numerous pieces of intermediate- and longer-term evidence are pointed up. That said, near-term, we still think some ups and downs (mostly based on the news/rumors of the day—this morning brought reports that new tariffs on China will be delayed) are likely as the indexes and many leaders consolidate their strong two-month advances.
Thus, you should remain bullish and heavily invested.
That said, as we also wrote last week, it’s also important to keep an eye on the stocks you own and are watching—as this rest period goes on, the action should give you clues as to which stocks big investors are really accumulating.
Right now, it’s clear that MasTec (MTZ) is not one of those stocks. We’ve been willing to give it a little room and (just as important) time to get over the odd financing-related dip it suffered, but instead of finding quick support (which would indicate the move was a shakeout), shares have slowly sagged and volume has actually picked up. We’d also note that one of its peers (Quanta Services, PWR), while in better shape, has also softened.
We’re not expecting MTZ to fall over a cliff from here, but the action has been weak and there are better names to own. We’ll cut the loss today.
That will leave us with around 22% in cash. We’ll hold on to that for the moment, but we’ll be looking to put some back to work in the near future.
We’ll be sending a fuller update per usual on Thursday (December 12). Please don’t hesitate to email (mike@cabotwealth.com) with any questions.