Current Market Update

From Cabot Growth Investor

What’s definitely true is that the intermediate-term trend isn’t pointed up; all major indexes are still below their 25-day moving averages, even after today’s bounce. And, longer-term, our Cabot Trend Lines remain clearly negative. Throw in the fact that few stocks are hitting new highs (less than 20 today on the Nasdaq!), and it’s a good reason to hold plenty of cash and, if you buy, to pick your spots (and stocks) carefully. Overall, it’s best to stay generally defensive until the market can prove it has more in it than a three- or four-day bounce, and to see whether some growth stocks can actually move out to new highs and stay there.

Comments

    • John — well, we tend to follow, not predict, and we’ve been raising cash at a quick pace, though that’s not to say there hasn’t been a ton of damage. That said, if we had bailed ahead of time on prior “corrections” we would have been knocked out of so many winners. It so happens that this decline has been a doozy, but selling everything after 3 bad days isn’t a good long-term strategy.

    • Hi John — I wouldn’t, at least not yet. Market is in a correction, and I have a hunch these stocks that have had giant runs are going to need time at the very least to build new launching pads. Great profit, but now that you’re out of it I’d just wait for a better market/proper entry point.

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