WHAT TO DO NOW: While a couple handfuls of mega-cap stocks act well, we continue to see more stocks hit air pockets than get going on the upside, which, combined with our mixed market timing indicators, has us staying relatively close to shore. Today we’re going to sell one-third of our stake in Cava (CAVA)—like so many names, the stock has been unable to break through resistance, and now it (and its peer group) has come under heavy selling pressure. Our cash position will now be just over 40%.
==
Once again, the big-cap indexes are up a bit today, but once again many growth names are struggling. As of 10:30 EST, the S&P 500 is up 0.3% and the Nasdaq is up 0.5%, but most growth measures are flat to down some.
Today’s bulletin is about Cava Group (CAVA), which of course has an amazing longer-term story—but like the vast majority of stocks, it hasn’t been able to go anywhere in recent weeks (selling on strength near resistance), and this week, it’s getting hit hard as the group (Chipotle, Wingstop, Sweetgreen, etc.) hits the skids.
To be fair, unlike those peers, CAVA is still hanging around its 50-day line, which could offer support—but we’re still suspect of this market environment, which is very divergent and where we’re still seeing more stocks hit air pockets than stocks getting going on the upside. We’re going to sell one-third of our CAVA stake here and hold the cash, aiming to hold the rest of our shares if the correction stays reasonable. SELL ONE-THIRD OF CAVA, HOLD THE REST
That will leave the Model Portfolio with something like 41% in cash. We’d prefer to put some of that back to work, but just taking things on a stock-by-stock basis, most of our watch list has been stagnant while more names are getting hit. Simply put, while most names are meandering, there are still more that are breaking down than breaking out.
It’s definitely an unusual situation, but we’re going to hold the cash here. In this week’s issue, we do write about the fact that, thanks to the sideways action, we are seeing many setups (launching pads) as we roll into earnings season, and if things go well, there could be a lot of fresh leaders to sink our teeth into. But, again, so far, relatively few names have been able to move, with more and more coming under pressure—so we’ll stay close to shore for now.
Don’t hesitate to email me directly at mike@cabotwealth.com with any questions.
Copyright © 2024. All rights reserved. Copying or electronic transmission of this information without permission is a violation of copyright law. For the protection of our subscribers, copyright violations will result in immediate termination of all subscriptions without refund. Disclosures: Cabot Wealth Network exists to serve you, our readers. We derive 100% of our revenue, or close to it, from selling subscriptions to our publications. Neither Cabot Wealth Network nor our employees are compensated in any way by the companies whose stocks we recommend or providers of associated financial services. Employees of Cabot Wealth Network may own some of the stocks recommended by our advisory services. Disclaimer: Sources of information are believed to be reliable but they are not guaranteed to be complete or error-free. Recommendations, opinions or suggestions are given with the understanding that subscribers acting on information assume all risks involved. Buy/Sell Recommendations: are made in regular issues, updates, or alerts by email and on the private subscriber website. Subscribers agree to adhere to all terms and conditions which can be found on CabotWealth.com and are subject to change. Violations will result in termination of all subscriptions without refund in addition to any civil and criminal penalties available under the law.
