WHAT TO DO NOW: The market remains in fine shape, but near-term potholes continue to be seen. Today, we’re taking some action, selling CrowdStrike (CRWD), which is flashing abnormal action today. That will leave us with around 27% cash in the Model Portfolio.
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The major indexes are starting off the week on a decent note—as of 10:15 am EST, the Dow is up 74 points and the Nasdaq is up 3 points. But growth stocks are lagging, and some names are cracking near term.
In the Model Portfolio, in fact, we’re going to take our medicine on CrowdStrike (CRWD), which is flashing abnormal action after yet another analyst downgrade today that cited increasing competitive pressures and slowing growth in the endpoint market. As always, we care less about what analysts say than what big money managers do, but after attempting to break out twice (both times rejected) and today’s huge-volume selling, we’re going to (relatively) quickly cut our loss and look for greener pastures. SELL
We also wanted to mention Dynatrace (DT), which we placed on Hold last week. The stock had a shot across the bow on earnings, and did bounce well from that, but today it’s back under pressure after news broke that its CEO is retiring next month. As we’ve written before, we think business is fine and, after its persistent run since May, a correction is reasonable. But DT is again approaching key levels and our profit is on the small side. We continue to advise holding on—it’s possible the CEO news proves to be a final shakeout—but we also are watching our mental stop in the 66 to 68 area. HOLD
The sale of CRWD will leave us with around 27% in cash, which we’ll hold onto for now—we believe further near-term shenanigans are possible with the market and growth stocks after the recent run. That said, we’re still quite bullish overall, so whether it’s this week or soon after, we’ll be aiming to put that cash to work as opportunities arise.
That’s all for now. Don’t hesitate to email me at mike@cabotwealth.com with any questions.