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%.
Current Market Environment
The market is down again today as more tariff threats and responses fill the headlines. As of 2:30 EST, the S&P 500 is off 1% and the Nasdaq is off 1.5%.
When looking at the overall view of the market, nothing has really changed in recent days, as the major indexes continued to move lower and with many kissing new correction lows today. Just about all of our key timing indicators (Cabot Tides, Two-Second Indicator, Aggression Index) remain clearly negative, and our Cabot Trend Lines could go red at week’s end if we don’t see a good-sized rally from here.
Near term, the selloff has certainly raised the fear level, in part because it’s been making headlines and has generally been linked to news (tariffs). Interestingly, the Investors Intelligence survey (which is the granddaddy of sentiment indicators) saw more bears than bulls this week, something that will often come near an intermediate-term low. Other oversold-type measures (like the number of new highs) are getting toward sold-out levels. And, interestingly, our Two-Second Indicator’s peak reading came last Tuesday (March 4), so we’re seeing a (minor so far) positive divergence given that the indexes have slid sharply since then.
Ideally, then, after three weeks of high-profile downside, the market may be getting close to a bounce phase—providing a low that the market can work from, and which may allow some wheat to separate from the chaff among individual stocks (with some names that can snap back on big volume). And, bigger picture, the fact that the decline is already affecting sentiment a good deal is a solid sign that there will be plenty of upside once this correction finishes up and bottoms out.
Still, right now, there’s no question that the trends are still down for the major indexes and the vast majority of stocks (two-thirds of S&P 1500 stocks—small, mid- and large caps—are south of their 200-day lines). With the primary evidence negative, we continue to favor a defensive stance while we look for the market to show some support.
If we do see some buying emerge and (importantly) some leaders really show some power, we could do a little nibbling given our humongous cash hoard (83%), but we want to see some decisive near-term upside before putting more money into what’s been a very weak situation—and, of course, we’d need to see our indicators turn positive before putting any big money back to work. We have no changes tonight.
Model Portfolio
Argenx (ARGX) fell out of bed during the market’s most recent leg lower, though the stock is trying to find a low in the 560 to 570 area. Given that we had a small position, a profit and a giant cash hoard, along with the uniqueness of the story (Vyvgart’s upward trajectory isn’t likely to be halted anytime soon), we decided to hang onto ARGX through this decline and see how it goes from here. To be fair, our cost near 540 is a line in the sand, so if the stock can’t hold up around here, we’ll be forced to move on, but given the reasonable decline (ARGX is “only” 15% off its highs, helped along by a couple of recent analyst upgrades), there remains a good chance shares can round out a new launching pad in the weeks ahead. We’ll see how it goes, but we advise holding for now, assuming you have plenty of cash on the sideline. HOLD A HALF
We decided to sell half of Flutter Entertainment (FLUT) earlier this week as the market continued to cascade and, frankly, this stock’s action was discouraging, plunging all the way to its 200-day line, and there’s been little bounce so far. Shares are in an area of support, and while there are fears of a recession hurting online gambling activity, the firm’s recent quarterly report and outlook were nearly pristine. Having just dumped some, we’d like to hold and see if and how strong any bounce will be—so far, this week has shown high volume and some supporting action. That said, if FLUT can’t hold up above its recent lows, we’ll likely dump the rest and either hold the cash or look elsewhere. SOLD HALF, HOLDING THE REST
On Holding (ONON) is also a small position, as we sold half of our stake a few weeks back, but it’s been living below its 200-day line the past few sessions, which means we’re not letting it go much farther down from here. We would say the stock has stopped underperforming the market during the past three weeks, which is a ray of light and small character change, and if the tariff shenanigans can calm down, we still think the stock can regain its former glory, as the recent outlook was outstanding. We’ll practice a bit more patience with our remaining small, profitable position, but like everything else, we’d like to see a bounce attempt unfold soon. HOLD
We’re not hanging our hat on this, but we’ve actually seen a bit of resilience during the past two to three weeks in a few of the former glamour winners, as some have (mostly) stopped going down (net-net) even as the indexes continue to falter. Palantir (PLTR) is one of those, with the stock hanging around the 80 area so far this month—and, overall, it’s still just south of the highs of its prior consolidation, which is far better than many growth peers. The firm hosted a product conference today full of some partnership announcements (nothing definitive on the financial front), and there has been some supportive analyst commentary after the dip, which is a plus. Having trimmed multiple times, we’re OK holding our remaining stake. HOLD
Watch List
Axsome Therapeutics (AXSM): AXSM remains relatively resilient, though it has lost some ground of late. The firm has two drugs on the market now, a third that’s been approved and three more likely headed to the FDA’s decision desk later this year. Sales are expected to grow north of 60% this year and next.
GeneDX (WGS): GeneDX is a smaller outfit that had a big run last year, so there’s no doubt the rug could get pulled here—but the firm’s genome and exome testing services are growing rapidly, and the stock (while super volatile) has remained orderly and is north of its 50-day line.
GE Aerospace (GE): GE has been dented along with everything else, but it’s hanging around its 50-day line (better than three-quarters of all stocks) and its prior highs. Of course, a big economic disruption could hurt fleet expansion (and jet building) plans, which is something to watch, but the odds still favor GE’s business advancing at a steady rate for many years.
Rubrik (RBRK): RBRK fell a sharp 37% from high to low, but all of it came on low weekly volume. The stock found support this week (it’s up on the week), and the quarterly report is due tonight. Obviously, a big downmove would have us looking elsewhere, but we’re still thinking the stock can round out a fresh launching pad thanks to its great growth story.
Penumbra (PEN): PEN has slipped 16% from its highs—not beautiful, but not abnormal action. The firm is the leader in devices for vascular blockages, a huge market where it’s quickly taking share. Margins here are growing nicely, which is helping earnings (likely to grow north of 30% this year and next) go through the roof.
Sea Ltd (SE): Sea is a Taiwan-based online outfit with operations all over Asia and in parts of South America, with a big e-commerce and gaming platform, as well as financial services (digital banking and payments). After a huge boom-bust during/after the pandemic, SE is seeing sales and earnings kite higher while the stock remains resilient.
TG Therapeutics (TGTX): A one-product firm is always tricky, but TGTX’s multiple sclerosis drug looks like something big, with sales and earnings starting to ramp. Shares actually broke out to new highs last week and are holding well so far.
That’s it for now. You’ll receive your next issue of Cabot Growth Investor next Thursday, March 20. As always, we’ll send a Special Bulletin should we have any changes before then.
Model Portfolio
| Stock | No. of Shares | Portfolio Weightings | Price Bought | Date Bought | Price on 3/13/25 | Profit | Rating |
| Argenx (ARGX) | 196 | 4% | 540 | 9/13/24 | 582 | 8% | Hold a Half |
| Flutter Entertainment (FLUT) | 480 | 4% | 231 | 9/20/24 | 233 | 1% | Sold Half, Holding the Rest |
| On Holding (ONON) | 2,625 | 4% | 40 | 5/24/24 | 46 | 13% | Hold |
| Palantir (PLTR) | 1,904 | 5% | 32 | 8/16/24 | 80 | 150% | Hold |
| CASH | $2,416,443 | 83% |
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