WHAT TO DO NOW: It’s been a brutal week for growth stocks, and that’s continuing today. Today, we’re forced to sell both Twilio (TWLO) and Uber (UBER) as both, despite solid Q1 reports, are sinking on heavy volume through our stops. That will leave us with a giant 70% cash position; we want to put a bit of that back to work if things stabilize, but for the moment, we’ll hang onto it..
As of 11 am, it’s another horrible day for growth stocks—the Dow is up 50 points, but the Nasdaq is down 80 points and the average stock we own or are watching is off more than 2%.
Over the past few weeks, growth stocks have gotten themselves in position to get going but we never saw much upside power, with low-energy breakouts in recent weeks, almost all of which failed. That kept us relatively cautious (half in cash).
And now, instead of earnings report being a catalyst for the bulls, most are leading to outsized declines, with some big winners from last year forming longer-lasting tops.
Last week, we saw Pinterest fall apart, and its inability to find support caused us to cut it loose earlier this week. This morning, two more of our holdings are being trashed after their reports, with Twilio (TWLO) gapping below its 200-day line and Uber (UBER) getting dinged as well, falling to the bottom of its range.
We’ll have more details in tonight’s issue of Cabot Growth Investor, but the horrid action demands a move. Thus, today we’re going to sell both TWLO and UBER – yes, they could bounce, but the horrid action of these stocks, their peers and nearly all growth titles tells us to get out. SELL both TWLO and UBER.
Those sells would leave us with something like 70% in cash. Frankly, we’d like to put a little of that to work in some setups (particularly energy stocks, which we write about in tonight’s issue), but for the moment we’ll sit tight and make sure the growth stock weakness doesn’t spill into the rest of the market.
Your next issue of Cabot Growth Investor will be e-mailed out this tonight. Don’t hesitate to email me mike@cabotwealth.com with any questions.