WHAT TO DO NOW: Remain cautious here as the correction plays out. Growth stocks continue to take the worst of it, with many names hitting intermediate-term peaks, though the selling is spreading to the rest of the market, too. Eventually, this should provide some excellent opportunities, but in the meantime we’re moving into more cash—today we’re going to dump our small-ish remaining positions of Monday.com (MNDY) and MasTec (MTZ), which will leave us with a bit over 50% in cash, which represents lots of buying power once the correction ends.
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The market is getting whacked again today—as of 11 a.m. ET, the S&P is down 1.2% and the Nasdaq is off 1.6%, with many growth stocks off much more.
The market’s correction is starting to accelerate a bit—growth stocks remain mostly under the gun, with some growth funds we watch already at or below 50-day moving averages, though we’re starting to see the selling broaden out a bit, with some resilient cyclical names getting hit today. The reasons for the drop (today it’s because of weak China data and some bank downgrades) aren’t all that important, but they do reveal that the market finally seems to be in the process of correcting and consolidating its May/June move.
Once again, nothing has really changed with the top-down evidence—today is the second plus-40 day of new lows, though that’s not abnormal given the selling we’ve seen. And our Cabot Tides and Cabot Trend Lines are still bullish, too. Once this retrenchment finishes up, the odds continue to favor another run higher.
But for the here and now it’s about managing your portfolio—and if you’re heavy in growth stocks, there are many names that are breaking intermediate-term support. We’ve done a fair amount of selling, and today we’re going to pull out a couple more weeds.
The first is Monday.com (MNDY), which retested its highs a couple of weeks ago but has been pulled down by the market since. We’re going to let go of our half-sized stake today. SELL MNDY
We’re also going to let go of our remaining stake in MasTec (MTZ)—shares are actually slipping through their longer-term 200-day line today. We’ll throw the rest of our shares overboard and look for greener pastures. SELL MTZ
That will boost our cash position up to around 50%—over time, we think that’s too much as from here we do think the next big move is very likely up in the market, and we could put a bit of it back to work very soon (next day or two) depending on how things play out. Right now, we’ll hold the cash, but as always will be on the horn if we have any other changes.
We’ll have more details on all our stocks in Thursday’s issue. Don’t hesitate to email me directly at mike@cabotwealth.com with any questions.
