The market gave back all of its gains yesterday and then some, with the Dow sinking 181 points and the Nasdaq plunging 60 points.
Taking a step back, the market’s month-long correction and consolidation has now put our Cabot Tides on the fence, though our Cabot Trend Lines and Two-Second Indicator remain bullish. Individual stocks are a mixed bag, with some acting very well but others breaking down.
Putting it altogether, we remain more bullish than bearish, however, we are going to pull in our horns a bit tonight to respect the market’s action.
In the Model Portfolio, we’re going to sell our weakest stock, Kate Spade (KATE), which has been caught up in the retail sector’s sharp decline.
We’re also going to place Five Below (FIVE) and Sabre (SABR) on Hold.
After selling KATE, the Model Portfolio will have 30% in cash and seven remaining stocks.
Four stocks are now rated BUY: Facebook (FB), ProShares Ultra S&P 500 Fund (SSO), Ulta Beauty (ULTA) and Vulcan Materials (VMC).
Our three other stocks are rated HOLD: Five Below (FIVE), PayPal (PPYL) and Sabre (SABR).