After a huge run and a choppy two-month stretch, the sellers have taken control and are crushing most stocks, especially growth titles, many of which broken down and--for the big winners of last year--are flashing abnormal action. With our Cabot Tides, Two-Second Indicator and Aggression Index firmly negative, we’re mostly on the sideline and are content to wait things out until the next uptrend gets underway.

Encouragingly, though, there are still a good number of fresher growth stocks (got going in the last two or three months) that are taking the selling in stride; upside will be limited for now, of course, but tonight we have an expanded watch list of names that could be new leaders down the road. Eventually, the sun will shine again, but for now it’s best to focus mostly on capital preservation, which will allow us to make that much more money when the bulls are back.

The market remains relatively mixed from a top-down perspective, but growth stocks remain a different story -- some still look fine, but the action is very hit or miss, and recently, more have come under pressure, with air pockets appearing all over the place this week. That doesn’t portend doom -- in fact, some things like sentiment are encouraging, and the indexes aren’t in bad shape -- but we’ve pared back this week and will look to reinvest the proceeds once big investors decisively step up to support growth stocks.

The market has been resilient in the face of some bad headline news during the past two weeks, but just about every major index and most stocks and sectors are essentially neutral--the evidence is as mixed as it can be. That’s not a bearish thing, per se, and we’re actually making one small new buy today in a peppy growth stock. But until we see more decisive action among growth titles (possibly as earnings season continues to ramp up), we recommend holding a good amount of cash (45% after our move tonight).

After a rough few weeks, the market’s recent rally has been welcome, improving the overall evidence ... though not quite yet in a decisive manner, as the intermediate-term trend is mostly neutral (those close to a buy signal) and many stocks are still toying with resistance. That’s descriptive and not predictive, though, so we did do some buying today, though we’re starting small and will look to build if the buyers stay at it.

Tonight’s issue talks about all of our market thoughts and goes over all of our stocks (including some long-time holdings that are perking up), as well as reviewing a couple of industry groups that are showing intriguing strength after tough down periods.

It’s not 2022 or 2008, of course, but the vast majority of stocks out there are in correction mode, and that includes the growth arena, which after a huge run began to hit turbulence in early December and has generally been under pressure since. Now, there are some rays of light out there, which we discuss in this issue, and we’re not having trouble keeping a full-ish watch list for the next upmove, but we’ve been favoring a cautious stance for a while now and think that remains the right move, as we’ve trimmed further this week and now have 60% on the sideline.

In tonight’s issue, we do write about one big positive factor out there (no strength in defensive stocks), talk about the allure of buying former winners “cheap” and, of course, write about all of our names and a bunch we’re watching for when the buyers retake control.

First off, this being our last issue of the year, all of us at Cabot wish you and yours a very happy, healthy and prosperous New Year. We’ll be back with a regular update next Thursday after the calendar flips.

As for the market, it’s been a fantastic year, with leading growth titles letting loose on the upside, and we’re happy to have made hay while the sun is shining—the year isn’t quite done but it’s looking like our second-best returns of the past 18 years, when I took over. We’re glad to have done right by you.

That said, we always deal with the here and now, so we’re riding into year-end in a cautious stance, as growth stocks have wobbled and our Cabot Tides and Two-Second Indicators are waving yellow flags. We’re definitely flexible, as some of the recent selling may have cleared the decks for another leg up, but given the evidence, we want to see strength first before embarking on another major buying spree. In this issue, we highlight more than a few names we could jump into if things go well, while sharing more details on our remaining stocks and the recent action.

After an amazing run higher, growth stocks hit an air pocket this week, with many highfliers coming down and some abnormal action being seen. We haven’t exactly floored the accelerator during the past few weeks, and we took our cues from individual stocks, paring back this week and leaving us with a good-sized cash position. That said, we’re not making any major market call--the trends remain up, and many growth stocks are acting OK--so while we want to see how growth reacts from here, we’re flexible and could put some money back to work soon if key names stabilize.

Today brought some selling in growth stocks, mostly egged on by weakness in some “old” leading groups, but the evidence (both market-wide and among leading stocks) is still bullish, so we are, too, though we continue to keep our feet on the ground and manage our portfolio given things are a bit euphoric. Today, we’re filling out one of our positions, leaving us with 13% cash.

Elsewhere in today’s issue, we go over some intriguing new ideas (including one peer of a name we own that looks terrific), and answer some of the barrage of questions we’ve been getting, with some talk about the weakness seen in the formerly strong chip group.

It’s been a great couple of weeks in the market, with the major indexes lifting nicely since the election and, more important, with leading growth stocks acting very well—while there have been some earnings wobbles, there’s been even more big rallies, with some stocks going into the stratosphere. It’s been a good couple of weeks, and with the evidence bullish, we are too—but we’re also keeping our feet on the ground, trimming some names on the way up and aiming to enter some fresher leaders, ideally on weakness.

The big picture for the market and for growth stocks remains very positive in our view, however, some near-term uncertainties and headwinds have kept us from doing much buying of late, and today saw the first real, widespread distribution in growth stocks since early September. Right now, then, we’re focused on managing our portfolio through earnings season, holding our strong names while jettisoning weak ones and looking to accumulate fresh leaders.

Tonight, we are selling one of our smaller positions that keeled over on earnings, and placing on other name on Hold--but we’re also sitting tight with our other strong, profitable names as we see what earnings season will bring.

After some choppy action the prior two or three weeks with defensive stocks leading, growth stocks and many major indexes have improved their standing - including the strongest names continuing to zoom higher. Now, near-term, there are some uncertainties, with earnings season and the election coming up, and there are still areas (including the Nasdaq itself) that are still battling with old resistance. Thus, we wouldn’t be shocked if extended names shook out a bit. But overall, we’re still leaning bullish, though are picking our spots; tonight we’re starting one more half-sized stake in a familiar name we think can do very well should the bulls remain in charge.

The market remains positive, but not powerful, with a lot of growth stocks and especially growth indexes and funds still batting with months-old resistance. Big picture, we think the next major move is up and a lot of the leadership of any coming run has already declared itself; indeed, we think we own some of the best names out there. But we’re not pushing the envelope here, as the market continues to deal with uncertainties (including this week’s Middle East tensions and dockworkers strike). We have no changes again tonight, though we’re staying flexible and are looking to add exposure as opportunities arise.

WHAT TO DO NOW: Remain defensive. Near term, we are seeing a couple of rays of light, including a developing positive divergence from our Two-Second Indicator and some legitimate dips in some reliable sentiment measures, so we’re not sticking our heads in the sand as the vast majority of primary evidence and our market timing indicators are negative, with the indexes so far having trouble finding much support. We could do some nibbling if the market finds a low it can work off of, but in the meantime, we advise staying mostly on the sideline and letting the sellers finish up their work. We have no changes tonight, and the Model Portfolio’s cash position is 83%.

WHAT TO DO NOW: Remain defensive. While there’s a chance the recent selling storm could be the final shakeout of this two-plus-month consolidation, the fact is the intermediate-term evidence (both top-down, and among many growth stocks) is now negative, with a lot of damage done to leaders. We’ve been holding a lot of cash for weeks but have pared back further, selling our remaining AppLovin (APP) stake on a special bulletin yesterday, leaving us with around a 66% cash position in the Model Portfolio. We have no changes tonight but are remaining flexible (buy or sell) for whatever comes next.

WHAT TO DO NOW: We continue to stay relatively close to shore as the major indexes remain rangebound and many stocks are hit and miss—but we are impressed given the resilience shown after some worrisome headlines, and earnings season has gone fairly well so far. Today and tonight, we’re making a few small moves: On the sell side, we sold one-third of our AppLovin (APP) stake today and, tonight, will sell half of our On Holding (ONON) position—but we’ll also buy an additional 3% position to Duolingo (DUOL) and start a half-sized stake in DoorDash (DASH). All told, we’ll still have a mid-40% cash position, but we could do more buying if the recent resilience leads to clear buying.

WHAT TO DO NOW: It’s been a typically volatile January, with this week’s huge convulsions among AI stocks the latest crosscurrent to deal with. Overall, the top-down evidence is mostly neutral at this point, and leading stocks are in a similar boat as last week—improving, but without much decisive buying so far. To be fair, we’d like to put some money to work and could do so soon (next day or two) if we get the right setup, but tonight we’ll stand pat and look for signs big investors are getting involved. In the Model Portfolio, we cut our loss in Marvell (MRVL) on a special bulletin Monday, though most of our stocks are acting well and tonight we’re placing On Holding (ONON) back on Buy as it looks to be resuming its overall uptrend. Our cash position is right around 50%.

WHAT TO DO NOW: Remain cautious but stay alert. The five-week drubbing for the broad market and many growth titles has caused sentiment to really drop (a good thing), and this week’s bounce (as interest rates dipped) is intriguing … but at this point, we’ve seen one decent day of action after five tough weeks, so we’ll stand pat with our large (60%-ish) cash position and watch closely to see how this rally develops.

WHAT TO DO NOW: Happy New Year! December’s weak action has created some decent setups and taken a chunk out of sentiment, both of which are good to see—but the underlying evidence hasn’t changed, with our Cabot Tides negative and few names heading higher. We came into the year with around half the portfolio in cash, and we’re remaining cautious today—our only change is placing Flutter (FLUT) on Hold.

First and foremost, all of us here at Cabot wish you a very Merry Christmas and a happy holiday season. Just a heads up that we’ll be publishing our last issue of Growth Investor this year next Thursday (December 26).

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WHAT TO DO NOW: Remain close to shore. Given the huge run, elevated sentiment and some cracks in growth stocks, we pared back fairly aggressively a couple of weeks ago, coming into this week with 37% in cash. And today we’re paring back further as the under-the-hood selling has come to the surface this week—we’ll take the rest of our profit in Cava (CAVA) and cut our loss in ProShares Russell 2000 Fund (UWM), which will leave us with around half in cash. Details below.

WHAT TO DO NOW: Remain bullish but continue to manage your portfolio and pick your spots carefully on the buy side. Our market timing indicators are in good shape, and leading growth stocks continue to impress, though near-term sentiment is getting euphoric. Tonight, we’re going to sell one-third of our stake in Shift4 (FOUR), which has fallen sharply on out-of-the-blue news, which will leave us with 16% in cash.

WHAT TO DO NOW: Remain bullish, but again, be sure to keep your feet on the ground. The pullback last week was tedious, and our Two-Second Indicator is looking iffy, but the market’s trends have remained up and growth stocks are still very strong. We sold one-third of our Palatir (PLTR) position earlier this week, booking partial profits in a good winner, and tonight we’re going to average up in Samsara (IOT), buying another 5% stake, which will leave us with around 19% in cash. Details below.

WHAT TO DO NOW: Remain bullish. The market has reacted well to the election and took today’s Fed decision in stride; both of our trend-following indicators are bullish and leading growth stocks remain in good shape. Today, we took partial profits in AppLovin (APP) via a special bulletin after it went vertical on earnings. But tonight, we’re putting that and a bit more money back to work via two new positions—starting half-sized stakes in Samsara (IOT) and the ProShares Ultra Russell 2000 Fund (UWM), leaving us with a cash position around 18%.

WHAT TO DO NOW: The market remains in good shape, though we have seen the indexes and many individual titles exhale a bit of late as many short-term uncertainties (earnings season and the election) and headwinds (rising interest rates) weigh. We’re bullish overall, but are being selective on the buy side—tonight, we’re standing pat, holding our 20%-ish cash position and collection of relatively strong performers.

WHAT TO DO NOW: Continue to lean bullish. The market’s overall position remains in a similar position—far more good than bad, though still a few flies in the ointment—so we continue to look to add exposure, but to do so carefully, as many stocks and indexes are battling with resistance. Tonight, we’re going to fill out our position in Flutter Entertainment (FLUT), adding another half-sized stake (5% of the portfolio). We’re also placing Argenx (ARGX) on Hold given its recent action. Our cash position will now stand near 25%.

WHAT TO DO NOW: The growth stock meltdown continues, with the major indexes and individual names under heavy pressure again today. Already with nearly 80% in cash, we’re not eager to sell wholesale in the Model Portfolio, but we also won’t just hold and hope. Today, we’re going to sell half our position in Flutter (FLUT), which has fallen sharply this week. We’ll hold the rest of our names as well as our 84% cash hoard.

WHAT TO DO NOW: Remain defensive as the ferocious selling in growth stocks continues. Today’s bulletin concerns Duolingo (DUOL), which reported a fine quarter and better-than-expected outlook—but the stock is cracking nevertheless. We’ll cut bait here, leaving us with around 72% in cash.

WHAT TO DO NOW: While we’re not aiming to sell wholesale given our large cash position (60% coming into this week), today we’re going to sell the remaining portion of our stake in AppLovin (APP), which is being mauled by a couple of short reports today. We had already sold the vast majority of our stake, but today we’ll sell the rest and hold the cash. Details on that (and other stocks) below.

WHAT TO DO NOW: The growth stock environment remains challenging, with lots of selling on strength and, this week, more than a few air pockets showing up, and this morning is showing ugly action. We’ve been holding plenty of cash for weeks and probing small new buys here and there without much luck, while paring back or kicking out names that break. Today we’re going to pare back further based on the action of individual stocks: First, we’ll sell one-third of our remaining Palantir (PLTR), while also ditching our half-sized stake in Reddit (RDDT). That will leave us with around 58% in cash—as always, we could redeploy some of that soon, but we want to see institutions step up.

WHAT TO DO NOW: The market is nosing generally higher of late, however, the action remains very hit or miss among individual stocks, with some emerging and others getting hit. Today’s bulletin regards Shift4 (FOUR), which is cracking today after a mundane Q4 report and a big announced acquisition—we took partial profits a couple of months ago and are going to take the rest of our gain off the table today.

WHAT TO DO NOW: The market remains resilient, but range bound, so we continue to go slow, with lots of hit-or-miss action out there. Happily, most of the Model Portfolio stocks are acting normally, though ahead of tonight’s update we’re going to make one small change—we’re going to sell one-third of what we have left in AppLovin (APP), which is up big again today after earnings, though it’s fading during the day. We’ll take some more profits off the table and hold the rest.

WHAT TO DO NOW: The popular AI stocks were hit extremely hard today on fears that the CapEx spending boom could be cut short following the DeepSeek successes, which in turn dragged the major indexes lower. Outside of AI, the damage was reasonable, which is a plus, but with the major indexes still trending sideways and few stocks decisively moving higher, we’re remaining relatively cautious. In the Model Portfolio, we’re forced to quickly cut our loss in Marvell Tech (MRVL), which was caught up in the out-of-the-blue selling storm among AI stocks. Our cash position will now be around 53%.

WHAT TO DO NOW: The market has rallied nicely in the past week, which has improved the evidence—though for both our indicators and leading stocks, it’s been good but not necessarily decisive just yet. Even so, we’ve been sitting on a big cash hoard for a few weeks and we’ll start to come off that today, buying half-sized (5% of the portfolio) positions in Marvell Tech (MRVL) and Reddit (RDDT) while also restoring our Buy rating on Shift4 (FOUR). Our cash position will now be around 48%—more details in tonight’s issue of Growth Investor.

WHAT TO DO NOW: The market is again mixed today, with the major indexes holding their own—but the under-the-surface action remains very hit-and-miss among growth stocks. Today’s bulletin concerns Palantir (PLTR), which has been churning for many weeks and is now starting to slip. It’s not a death knell, but we’re going to trim here, selling one-third of our remaining shares in the stock.

WHAT TO DO NOW: Happily, the year is off to a generally good start, but the situation remains tricky, with the market’s intermediate-term trends neutral-to-negative and with the early January effect (tons of volatility among individual stocks) being seen in many names. Today’s bulletin is regarding Axon Enterprises (AXON), which has been a solid winner for us but has been losing ground for a few weeks and today is cracking support on big volume. We’ll sell our remaining shares, taking the rest of our profit off the table. Details below.

WHAT TO DO NOW: We’re paring back further today, not because of any major change in the top-down evidence, but simply taking our cues from individual stocks. Today we’re going to sell our stake in Samsara (IOT), which pulled back normally after earnings last week, but the follow-on selling prompts us to cut bait. That sell will boost our cash position to the upper 30% range, which we’ll hold on to for now. Details below.

WHAT TO DO NOW: Growth stocks are finally hitting air pockets today after massive runs, and while many look fine from an intermediate-term point of view, some appear iffy after massive runs. Thus, we’re paring back today: We’re going to take more partial profits in AppLovin (after already booking some profit this morning), as well as selling one-third of Axon (AXON), which isn’t as extreme as some others but is coming under pressure. Details below.

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