WHAT TO DO NOW: This week has been good for the overall market, but for the leading growth titles, we’re seeing more abnormal selling than we have in a while. That’s not to say everything is in tatters, but we’re going to prune a bit more in a special bulletin this afternoon—right now, we’re going to sell our remaining shares of Teladoc (TDOC), which is breaking support, and we’re going to sell one-third of our stake in Twilio (TWLO), which looks tired after a big run. That should boost our cash position into the 31% range.
The major indexes have had a decent week, with most of them up in the 2% range despite a good-sized selloff so far today. From a big-picture perspective, most of the evidence remains bullish, so we’re optimistic the path of least resistance remains up.
However, we’re finally starting to see meaningful cracks in some of the growth leaders that were first out of the gate—some have cracked support, while others have taken on a lot of water, with huge-volume selling, even on “good” news.
Happily, there are some other names holding just fine, so we’re viewing this as more of a stock-by-stock situation—some stocks look fine, even pushing higher, and for those we’re fine giving them room to pull in and consolidate. But we have a couple of names that are acting funky.
The first, of course, is Teladoc (TDOC), which looks set to finish up a terrible week on record-high volume after what has been a huge upmove. Maybe we’re being premature, but we’re going to sell the rest of our position here, taking our profit. SELL.
Then there’s Twilio (TWLO), which has had a monster run from its earnings gap in May, but has sold off sharply this week after its Q2 report and a big share offering. Big picture, the damage here isn’t awful, but we’re going to take partial profits, selling one-third of our shares and holding the rest. SELL ONE-THIRD, HOLD THE REST.
That should boost our cash position into the 30% range (give or take); we have no other changes to our Model Portfolio today.
Your next scheduled message is next Thursday’s (August 13) Cabot Growth Investor, though we’ll be on the horn before then if we have any further changes.