WHAT TO DO NOW: The market is testing key levels, as are many indicators, but today’s bounce is a small positive. Today’s bulletin is about Shift4 (FOUR), which cracked support on huge volume two weeks ago and hasn’t been able to bounce at all since. We’re going to sell one-third of our position today and see what earnings brings tomorrow. Our cash position will be around 38% after the sale.
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The major indexes are up some this morning, though they continue to swing around based on headlines. As of 11:45 a.m. ET, the S&P 500 is up 0.5% and the Nasdaq is 0.8%, though most growth stocks aren’t doing much.
Big picture, we’re still leaning bullish, but it’s fair to say a good amount of evidence is on the intermediate-term fence. A strong rally from here would obviously be good to see—and could reveal many solid entry points—but much more selling would likely have us paring back.
Today’s bulletin concerns Shift4 (FOUR), which has a great story, and the long-term trend still seems to be turning up. However, (a) shares broke their 50-day line on big volume, (b) they’ve been unable to bounce at all, even testing their recent lows today, and (c) we have a loss on the position. Moreover, the firm is set to report earnings tomorrow morning before the open.
As usual, we have no predictions about the reaction to earnings—by all accounts business should remain robust, with big earnings and free cash flow growth, too. But just looking at the facts, we have a slightly wobbly market, FOUR is our weakest stock and is showing us a loss.
Because of that, we’re going to lighten up, selling one-third of our position today and then seeing what earnings bring. If the stock reacts poorly, we’ll be glad to have trimmed some and could sell the rest—though if FOUR does rebound, we’ll aim to ride what ideally will be a new upmove.
Today, though, we’re selling one-third of Shift4 (FOUR) and holding the cash.
Don’t hesitate to email me directly at mike@cabotwealth.com with any questions.
