WHAT TO DO NOW: The market is quiet today, and while the possibility of a near-term pullback in growth stocks is growing, the big-picture evidence remains in good shape. Today, though, we are pulling the plug on Inspire Medical (INSP), which hasn’t been able to get going and today is cracking support on big volume. We’ll sell our half position and hold the cash.
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The market is relatively quiet this week ahead of the Fed and a deluge of earnings reports. As of 1130 am EST, the S&P 500 is up 0.5% and the Nasdaq is up 0.2%.
Big picture, nothing has changed with the evidence or our indicators—the trends are up, the broad market is healthy and most growth stocks remain intact. That said, near term, we do think the odds are growing the market might have its first “real” pullback—nothing huge, but we’re finally seeing some sellers in growth stocks and some buying in defensive names.
We’re still overall bullish but are taking things on a stock-by-stock basis and looking to earnings season to guide us on our next set of buys.
Today’s bulletin is about Inspire Medical (INSP), which has broken badly—it was testing new high ground just a few days ago, but now it’s breaking its 50-day line on heavy volume. A bounce is possible, but INSP has had trouble getting going for weeks and today’s action tells us to cut bait on our half position and look for stronger names. SELL INSP
That will leave us with around 21% in cash, which we’ll hang onto. We may have more rejiggering in the Model Portfolio in the days ahead, possibly pruning a laggard or two and possibly buying some better-looking names—but tonight, selling our half-sized stake of INSP is our only move.
Don’t hesitate to email me directly at mike@cabotwealth.com with any questions.
