WHAT TO DO NOW: In yesterday’s update we wrote that the market still had a lot to prove, and indeed, the market is down further today despite a dip in interest rates—and more important to us is that some of the resilient names are getting hit with the market. One of those is Uber (UBER), which is cracking support on no news. We’re not craving more cash, but we’ll respect the action and sell one-third of our stake in Uber (UBER) this afternoon and see how it goes from here. Our cash position will now be in the upper 60% range.
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The market opened decently today but we quickly saw the resilient Nasdaq and growth stocks take a hit. As of 1:30 p.m., the S&P 500 is down 0.8% and the Nasdaq is off 1.5%.
Our overall view hasn’t changed from yesterday—we consider the action of the past week a good first step or two for the market, especially coming off some real oversold conditions and major pessimism. That said, there’s simply more work to do, with our Cabot Tides and Two-Second Indicator negative and most individual stocks in downtrends.
Thus, we’re comfortable sitting patiently in a cautious stance while waiting to see if this rally attempt can gain steam.
Today, we’re seeing some of the resilient names that popped higher in the past week come under pressure—most are still OK, but it does bear watching heading into next week.
Some, though, are looking worse than others. Uber (UBER) has been etching higher lows for weeks, but today is falling sharply on no news, moving beneath support early this afternoon. Given our huge cash position, we’re not craving more cash, but we’re also not going to ignore continued weakness in any of our stocks. We’ll sell one-third of our stake and hold the rest. SELL ONE THIRD, HOLD THE REST
That will leave us with a cash position in the upper 60% range, which is certainly up there. We remain flexible and open-minded, so if this late-week market dip stabilizes and (more important) some more leadership perks up, we could nibble on a strong name or two. But right here, we’ll hold our big cash hoard and see how things play out early next week.
We’ll have more details on all our stocks in Thursday’s regular update. Don’t hesitate to email me directly at mike@cabotwealth.com with any questions.
