WHAT TO DO NOW: The market’s action continues to take steps in the right direction, with more bullish character changes among big-picture measures and, more importantly, leading stocks. Tonight, we’re going to add some exposure—we’re going to add another 5% stake in ProShares Ultra S&P Fund (SSO), buy another half-sized stake in Uber (UBER), and start a fresh half position in DoubleVerify (DV). That will leave us with just over half in cash—still plenty of cushion if the rally falters, but also lots of dry powder to pounce on new leaders should they continue to firm up.
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The market is up a bit this morning, with the S&P 500 up 0.2% and Nasdaq up 0.3%.
It’s only been a few days, but the evidence has been taking steps in the positive direction nearly every session. Our Cabot Trend Lines remain solidly bullish, our Cabot Tides are still neutral but are suddenly not far from a green light and today has a chance (early signs are positive) to be the third straight day of sub-40 new lows for our Two-Second Indicator—again, not an all-clear, but steps in the right direction.
Far more impressive to us is the 180 seen in many leading stocks. It started with the AI boomlet, of course, but it’s broadened out in a big way, with many names lifting off, and, importantly, these stocks have held or built on their gains.
That’s not to say all of the market’s problems have vanished—most stocks are still below key moving averages, for instance, and the number of names hitting new highs, while improving, still isn’t anything to write home about.
That said, given our cash position, we’re going to put another chunk of money to work. Today we’ll make three moves, buying half-sized (5% of the portfolio) positions in the following:
First, we’ll add to our leveraged long index fund, ProShares Ultra S&P Fund (SSO), as the S&P 500 has broken out on the upside.
Second, we’ll average up on Uber (UBER), which continues to act well—we remain optimistic the third time is the charm here, with the early-May blastoff likely to lead to a sustained move.
And third, we’ll buy a half-sized stake in DoubleVerify (DV), which we’ve been following for a bit, but the stock has registered new price and relative performance (RP) highs. We think its digital ad verification services should remain in demand for years.
This will leave us with just over half in cash – still lots of cushion should the market rally hit resistance, but plenty of buying powder should the buying pressures spread.
Don’t hesitate to email me directly at mike@cabotwealth.com with any questions.
