The market has definitively changed character, with our Cabot Tides and Two-Second Indicator now negative—when combined with breakdowns among leading growth stocks, the odds favor more short-term weakness ahead. We’ve been holding some cash for a while and have boosted that this week, with 37% on the sideline, and we could raise more if the selling continues.

That said, we’re not aiming to hide out in our bunkers--following some short-term pain, the odds favor further long-term gains given the underlying trend and the lack of big-picture abnormal action out there. Thus, having taken partial profits in many names, we’re OK giving them a chance to find support, as some are likely to have another leg up after this downturn. In tonight’s issue, we’re moving a couple more stocks to Hold, hanging onto our cash and writing about many names that are taking the selling in stride and could have upside if the market finds its footing.

WHAT TO DO NOW: Continue to play things a bit carefully as the market’s position deteriorates. Our Two-Second Indicator and Cabot Tides are weakening, and leading stocks, which had been churning for weeks, are continuing to give up ground. It’s possible this morphs into some sort of news-driven shakeout (especially given the hourly Middle East headlines), but we’re simply taking it as it comes. We already have 28% cash in the Model Portfolio, but we’re going to pare back further, cutting our loss in our half position in Celsius (CELH) and selling one-third of our position in Pulte (PHM). Our cash position will now be around 36%.