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.
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The major indexes are off to a good start on the week, with the S&P 500 and Nasdaq up nicely. Growth stocks, too, are doing well, but the action is far more mixed, with some tech names up nicely but a lot of stuff flat or down.
This message concerns Axon Enterprise (AXON), which has done well for us in recent months, but it got hit initially in December with most growth stocks—which caused us to take partial profits (sold one-third of our position) early last month. A correction from there was reasonable to expect, but instead of finding support in the weeks that followed, AXON has failed to bounce … and today is crashing through support on huge volume, dipping below its 50-day line and round-number support near 550.
Could this be a shakeout that leads to higher prices? It’s possible, and if you want to sell some/hold some to see how things play out, we wouldn’t argue with it. But we’re looking at the overall picture, as the stock is clearly losing favor after a huge run in recent months as other growth titles are finding some support. Thus, we’re going to sell our remaining shares here. SELL AXON
That will boost our cash position to around 56% (ballpark), which is likely too high overall—assuming the market and growth stocks don’t turn ugly, we’ll likely put some of that back to work here in the days ahead. But for now, we’ll collect the rest of our gain on AXON and look for greener pastures.
Don’t hesitate to email me directly (mike@cabotwealth.com) if you have any questions.
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