WHAT TO DO NOW: Do a little more buying. Today’s action is very broad and bullish, with our Cabot Tides flipping to positive and with more stocks acting well and hitting new highs. Short term, it’s possible (even likely) we see some retrenchment after a straight-up move in some stocks, we’re going to beef up a couple of our positions today and look to put more cash to work soon (possibly in the next couple of days)—we’ll fill out our stake in Nutanix (NTNX) and add a 3% position back to Uber (UBER), which looks very powerful. Our cash position will now be around 57%. Details below.
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After a tamer-than-expected inflation report cemented the idea that the Fed is on hold, the major indexes are booming this morning, with the S&P 500 up 2.1% and the Nasdaq up 1.8%—and the broader indexes are doing even better.
The rally that started November 1 has been promising, but there have been some flies in the ointment, but now it’s looking like some of those are clearing up: Our Cabot Tides are turning positive today thanks to the broad rally; we’re starting to see the new high list expand along with solid follow-on buying in many leaders; and today’s slippage in interest rates is just about close enough to turn the intermediate-term trend down.
Now, in the short term, the good news is out (inflation coming down, Fed on hold most likely) and many leaders have run straight up, so loading up on a ton of names here probably isn’t ideal. Moreover, let’s not forget that, big picture, the market has turned up for “just” two weeks, so things are still trying to build up a head of steam.
Still, we always go with the evidence, and there’s no doubt that the market is acting well off what we thought was a good setup, with more stocks and some indicators turning up. Today, then, we’ll do a little more buying and look to continue on that path (ideally after a bit of exhale in leaders) if things remain on track.
Today we’re going to fill out our position in Nutanix (NTNX) by adding another 5% position and add back a 3% position to our Uber (UBER) stake, leaving us with around 57% cash on the sideline. We’re likely to have more new buys soon (could be as quick as the next day or two depending on how things go), but today we’ll fill out some of what we already have.
We’ll have more details on all our stocks in Thursday’s issue. Don’t hesitate to email me directly at mike@cabotwealth.com with any questions.
