WHAT TO DO NOW: The market continues to show some positive secondary signs, including another positive divergence in the broad market. However, today, we’re going to take partial profits in Devon Energy (DVN), partly because the group move is obvious but also because it’s a giant part of our overall portfolio. Our cash position will now be in the upper 70% range—ideally, we’ll put some of that to work soon if the market can get moving, but tonight we’ll hold onto it. Details below.
The market was down earlier today but, after testing the January lows yet again, the major indexes are perking up somewhat, with the Dow up 440 points and the Nasdaq up 230.
The primary evidence hasn’t changed yet—one good day isn’t going to change the downtrends in the major indexes. That said, we continue to see encouraging signs from the broad market: Today brought yet another positive divergence in the number of new lows on the Nasdaq, with fewer stocks joining the downside even as that index retested the January and February lows again today.
Thus, we’re keeping our eyes open—there are certainly signs in place that some sort of upturn could come, but let’s see how things play out.
However, tonight, we’re actually going to make a move on the sell side: We’re going to sell half of our stake in Devon Energy (DVN), which has been one of the leading energy stocks for months and continues to have an excellent free cash flow profile for the months ahead. However, there’s no question shares have had a big run, and that all commodity stocks are very obvious in the near term—plus, just as important for us, DVN has become a giant piece of our portfolio (20% or so). Thus, we’ll sell half our stake today and hold the rest. SELL HALF, HOLD THE REST
We’ll have a fuller update in Thursday’s issue of Growth Investor.
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