WHAT TO DO NOW: Growth stocks remain under severe pressure, with more unraveling today. We had 43% in cash coming into today, and this afternoon we’re going to sell the rest of our DocuSign (DOCU) and our position in Okta (OKTA), which will give us a big 55% cash hoard.
Today has been another brutal morning for growth stocks—after an initial bounce, the sellers have driven stocks sharply lower. As of 10:45 a.m. ET, the Dow is off 370 points while the Nasdaq is melting down 450 points. The average stock we own and watch is down about 7%.
We have been paring back all week and came into today with 43% in cash, and today we’re going to cut bait on two more names—our remaining shares of DocuSign (DOCU) and our position in Okta (OKTA), both of which appear to have etched intermediate-term tops.
Backing up a bit, the Nasdaq is already closing in on its 50-day line, and we wouldn’t be surprised to see some bounce attempts (possibly sharp ones) in the days ahead. If the buyers can step in and stabilize names for a few days, we could put a little money back to work—the market’s overall trends are still positive, and even among growth stocks, many (while pulling in hard) have not broken key support.
However, given the overall action—huge, prolonged runs in many stocks, accelerated moves higher during the past couple of weeks in the major indexes and a bunch of names, followed by intense, abnormal selling pressure—we’re favoring being safe over sorry.
Your next scheduled message is next Thursday’s issue, but we’ll be on the horn before then if need be.