The market was met with some selling as investors returned from a long weekend, with sentiment souring after Apple said they’re unlikely to meet Q1 guidance due to supply and demand issues from China due to the effects of the coronavirus.
Most stocks fell, and the selling was fiercest in names that are related to Apple and that have plenty of exposure to China (either via supply chains or demand from Chinese consumers). Qorvo (QRVO), which has been struggling in recent weeks on virus-related fears, was caught up in the selling, closing below our mental stop in the 104-105 area.
We do have mixed emotions, as any clear-up of the virus down the road could easily bring the buyers back to QRVO and other related stocks, as nothing has changed (except the timing) with the 5G story. Even so, the stock has been underperforming even its 5G peers, and our modest profit has evaporated after earnings.
Thus, we’ll follow the plan, sell QRVO and look for greener pastures. The sale will leave us with around 28% in cash in the Model Portfolio, which is too high given the evidence. We have no new buys tonight, but we’re likely to put some money to work later this week (and when we do, we’ll let you know).