WHAT TO DO NOW: The worm continues to turn for growth stocks, which are mostly lagging (at best) or cracking uptrends (at worst) after huge runs. The market’s overall evidence still looks OK, and even among growth stocks, some look decent, but we continue to pare back, mostly by taking partial profits in our names. Today, it’s Chegg’s (CHGG) turn, as we’ll sell one-third of our shares and hold the rest. Our cash position will now be around 36%.
The major indexes are having a good day overall, and growth stocks are mostly green, but even there we’re seeing lots of so-so action.
Overall, most of the primary evidence remains positive, so we’re not anxious to sell wholesale. But we’re not going to ignore changes in character seen among most growth stocks, either, especially after most have had such long, prolonged runs.
Last Friday, we sold our remaining shares in Teladoc (TDOC), booking our big profit, while also taking partial profits in Twilio (TWLO). On Monday, we took partial profits in Cloudflare (NET). And today, we’re going to do the same with Chegg (CHGG), selling one-third of our shares as the stock’s straight-down move this week looks abnormal-ish after the recent run.
Today’s sale will give us around 36% cash in the Model Portfolio; we’re not opposed to actually doing a little buying among some names that have pulled in normally and/or fresher leaders that have gotten going in the past three or four weeks. But for right now, we’re going to sit tight and wait for growth stocks to find support.
Your next scheduled message is tomorrow’s (August 13) Cabot Growth Investor, though we’ll be on the horn again if we have any further changes.