WHAT TO DO NOW: Remain cautious as the market’s correction accelerates. Today is another poor day in the market, and while nothing’s changed with the evidence, more stocks are melting away. Today we’re going to sell the rest of our stake in Arista Networks (ANET), which hasn’t been able to get off its knees since last Friday’s decline and is our weakest stock. Our cash position will now be around 44%.
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The market opened mixed today but selling on technology stocks has dominated the day—as of 2:45 pm EST, the S&P 500 is down a modest 0.8%, but the Nasdaq is down 1.9% and, once again, growth measures are off more than that.
Nothing much has changed with the overall picture from yesterday’s issue—the long-term trend is up, but odds favor more short-term pain ahead as our Cabot Tides and Two-Second Indicator are solidly negative and we’re seeing selling picking up in many leading tech names (especially chip stocks, which were key to the five-month rally).
The market is oversold here, and a bounce is possible if not likely, and with a decent chunk of cash on the sideline, we’re not selling wholesale. But we are keeping a close eye on our weakest stocks and losers.
Arista Networks (ANET) is our weakest name right now, nosing below the 250 support level as AI-related stocks (including chip stocks, which ANET tends to trade with) are cratering, even including sacred cows like Nvidia.
We sold one-third of our shares a few weeks ago, and we’ll sell the rest this afternoon—we think the heavy selling of the past couple of weeks means there will be better stocks to own when the market turns up.
Our cash position will now be around 44%.
Don’t hesitate to email me directly at mike@cabotwealth.com with any questions.
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