Search

Following what seemed to be a perfectly successful quarterly report on Monday evening, YY opened up today but then plowed steadily lower all morning. The stock found support at 117, and rebounded slightly finishing the day near 120.

Updates on two of our stocks that reported earnings this week.

Now that the stock market correction finally arrived, I want to sketch out what investors can expect in the near future.

Two of our stocks reported earnings yesterday.

After a sharp selloff last week, the sellers really showed their muscle this week, driving the indexes sharply lower even after this morning’s solid bounce.

Right now, my advice is to continue to deploy cash into your favorite stocks.

The recent wave of selling has taken a bite out of the major indexes, and has undercut most of the stocks in our portfolio.

We remain bullish overall, and you shouldn’t overreact to an overdue pullback; the major indexes are still in uptrends, and many stocks look fine. That said, given the action, you shouldn’t be complacent, either. Dump anything that cracks, tighten some stops and look for lower-risk entry points.

The market has recovered well from its January–February slide, but after forming a V-shaped bounce, the major indexes have stalled out over the last few days. It’s likely that markets will need a while to catch their breath, and we don’t want to get ahead of them. In the Model Portfolio, while we are close to recommending new buys, we want to have the Cabot Tides at our back when we do so.

The market is certainly healthier, but it probably won’t go straight up from here. In fact, it’s more likely that sellers will see this bounce as an opportunity, and we’ll get another, probably smaller, leg down before the market starts a sustainable new uptrend.

The recent rally has been enough to turn our Cabot Tides positive, as three of the five indexes we track are clearly above their 50-day lines. That’s certainly a positive and tells us to put some money back to work.

Volatility continues on Wall Street. Every time stocks seem to be building sustainable momentum, they run into a brick wall. The CBOE Volatility Index (VIX), a.k.a. the investor “fear gauge,” remains well above its 52-week average, showing that there are still some concerned investors out there.

Aerospace and oilfield service supply company KLX Inc. (KLXI) reported a strong fourth-quarter 2018 earnings beat this week (January year-end). Non-GAAP earnings per share (EPS) were $1.00 vs. the expected $0.88.

The major indexes have traded lower this week—in fact, the S&P 500 is threatening to close lower all five days this week, which would be the first time it’s done that since before the November 2016 Presidential election. Even so, the losses have been modest, in the range of 1% or a bit more.

Many of our stocks appear to be advancing this week. There are a few that I’ll be selling soon due to either valuation or upside price resistance, yet they remain excellent longer-term investments, including Alphabet (GOOGL).

Our position hasn’t changed much since the start of the week. We’re relatively cautious (though not outright defensive) and stepping lightly as we wait for the market to confirm a new uptrend for leadership to take shape.

Two of our stocks reported their latest quarterly results yesterday and both disappointed; one is now rated Sell.

The iShares EM Fund (EEM) bounced strongly in early March, which returns the Emerging Markets Timer to a positive reading. Granted, it’s not the strongest signal we’ve ever seen, but it counts. Quarterly reports are winding up, and we’ll take the Timer’s advice and return one stock to a Buy rating.