WHAT TO DO NOW: The market has bounced decently during the past couple of days, and we’re cautiously optimistic that a workable low is in. That said, the action of individual stocks remains hectic, with many resilient names sliding as those near new lows bounce. Teladoc (TDOC) is an example, as after a massive run it’s come back to Earth over the past couple of days. While we’ve already taken partial profits twice, we’re going to sell 25% (one quarter) of our remaining shares and hold the rest. Details below.
The market was mixed today, with most beaten-down areas bouncing, while growth and other resilient names backed off. At day’s end, the Dow had rallied 495 points but the Nasdaq lost 34 points.
Overall, with the market’s intermediate- and longer-term trend down, the Model Portfolio remains in a defensive stance. It’s possible we could nibble on something if this bounce gains steam and if resilient stocks start to pop. But even if we’ve hit a workable low, the market likely needs a longer bottoming process—thus we’re not aiming for any major buying until we get the go-ahead from our indicators and leading stocks.
Tonight’s message is in regards to Teladoc (TDOC), which has been a great performer this year. But after what could have been a short-term climax earlier this week, shares have come off sharply the past two days on massive volume. The stock is far from broken, and while we’ve already trimmed our position twice, we think it’s prudent to take a few more chips off the table—we advise selling a quarter, or 25%, of your remaining shares. (If you currently have 100 shares, sell 25.)
Our cash position will now be in the low-70% range, and happily, despite TDOC’s sharp retreat, the portfolio is still in the black for the year as a whole. We have no other changes tonight—and we’ll have all our latest thoughts
Don’t hesitate to email (mike@cabotwealth.com) with any questions; we’re here to help in these crazy times. Your next issue of Cabot Growth Investor is coming tomorrow, Thursday, March 26 after the close.