After a half-hearted mid-week bounce, the stock market had another rough day yesterday. The S&P 500 fell almost 4%, and is now 10% off its all-time high. That means we’re now officially in a correction, although we didn’t really need yesterday to tell us that.
Now that we’ve given our stocks a few days to sort themselves out, I’m going to lighten up on some of our weakest names. I’m selling half of ExxonMobil (XOM), our newest and worst-performing position by far, and we’re going to take some profits in Pembina Pipeline (PBA) while we still have them. Next on the chopping block, if necessary, are American Express (AXP), Cummins (CMI) and Ecolab (ECL), as described below.
As always, please email me at chloe@cabotwealth.com with any questions or concerns, and try to keep a long-term perspective.
Sell Half of Pembina Pipeline (PBA)
PBA fell further yesterday, closing at its lowest level since August. We still have a small profit (5% on a price-only basis) and we’re going to cash in half of it now. PBA could bounce here, but it’s well below its 200-day line, which has provided support in the past. Pembina will report 2017 results before the open on February 23.
Hold American Express (AXP)
AXP remains above its 200-day moving average, but management’s decision to suspend share buybacks is still a concern. We’re still watching closely.
Hold Cummins (CMI)
I noted Wednesday that CMI might pull back further before rebounding, possibly touching its 200-day moving average at 164, and that’s what the stock did yesterday. CMI previously found support at the 200-day in August and November, so if it bounces here all is well. If it doesn’t, we’ll probably sell half our position early next week.
Hold Ecolab (ECL)
ECL closed below its 200-day moving average yesterday, its lowest close since May 2017. That’s flipped our small profit to a small loss, making ECL one of the weaker stocks in our Safe Income tier and a candidate for a full or partial sale next week.
Sell Half of ExxonMobil (XOM)
Four days of fierce selling have brought XOM to its lowest level since August. I was hoping to reduce our position on a bounce above 80, but we didn’t get anywhere close to that. So, we’ll just sell half our shares at today’s average price, and at least reduce the risk of a more catastrophic loss.
The rest of our positions retain the same ratings as in Wednesday’s update.