The market sold off sharply today, with the Dow losing 200 points and the Nasdaq plunging 82 points.
Today’s move pushed our Cabot Tides back into a negative stance, as most major indexes have pulled away from their 50-day moving averages. Moreover, we’ve seen a few leading growth stocks break down during the past couple of weeks, the first time that’s occurred in a couple of months.
Of course, not all is doom and gloom in the market, as our Cabot Trend Lines and Two-Second Indicator (36 new lows today) are still positive, the major indexes are just 2% to 3% below their highs, and some big-cap growth stocks are acting resiliently.
Even so, the Tides sell signal and the inability for the market to make forward progress for many weeks tells us to trim our sails further.
In the Model Portfolio, we’ve held 30% cash for the past month as the market has chopped sideways. Tonight, we’re going to raise that cash position to around 40% by selling Veeva Systems (VEEV), which has cracked its intermediate-term uptrend in recent days.
We’re also going to place GrubHub (GRUB) on Hold and keep it on a tight leash.
All told, the Model Portfolio will now have six stocks out of a possible 10, with just three stocks rated Buy. They are Abiomed, Alibaba and Facebook. We’ll keep GrubHub, ProShares Ultra S&P 500 Fund and Ulta Beauty rated Hold for now.