WHAT TO DO NOW: The market was sluggish and sloppy coming into yesterday, which is why we’ve been sitting in a cautious stance with 45% or so of the portfolio in cash. But, while there are still longer-term positives out there, the selling pressures have exploded since the Fed’s meeting yesterday, with interest rates hitting new highs and growth stocks being walloped. We’ll have more in tonight’s issue, but today we’re going to sell one-third of our positions in Celsius (CELH) and the ProShares S&P 500 Fund (SSO) and are placing Uber (UBER) and Noble (NE) on Hold. Our cash position will now be in the low 50% range.
==
The market fell hard yesterday and is doing the same today, with growth stocks taking the worst of the beating. As of 1150 EST, the S&P 500 is off 1% and the Nasdaq is down 1.2%, but many growth stocks are off much more than that.
The market has been sloppy for a while now, which is why we’ve been patient and cautious, and now the selling pressures are really picking up as interest rates break out on the upside. It’s not 2008 out there (or even 2022), but more and more stocks are taking on water, including many we own—and, bigger picture, there simply isn’t any money being made as few stocks are able to sustain any upside.
Thus, we’re paring back further today. First, we’re going to sell one-third of what we have left of Celsius (CELH), which has cracked sharply off the top the past two days. We don’t think the major trend is over, but stocks that have had big runs are vulnerable in a weak market, so we’ll sell some and hold the rest. SELL ONE THIRD, HOLD THE REST
We’ll also sell one-third of our stake in the Proshares S&P 500 Fund (SSO), which is back to its August lows in a hurry. Our plan was to give it room above that, but with the recent downmove, we’ll sell some and hold the rest. SELL ONE THIRD, HOLD THE REST
We’ll also place Noble (NE) and Uber (UBER) on Hold given that they’re getting caught up in the market’s weakness.
Down the road, we still believe the odds favor the next major move being up—and, frankly, while everything is taking on water today, there remain more than a few “normal” looking launching pads being built among growth stocks. So if the market doesn’t totally unravel, a strong upturn in the weeks ahead (maybe in October, when many strong rallies are born) should prove fruitful.
But we have to go with the here and now, and there’s no question that, after some up-and-down action, the selling is intensifying, so paring back further is advised.
We’ll have more details on all our stocks in tonight’s issue and will have more special bulletins if we have moves before then. Don’t hesitate to email me directly at mike@cabotwealth.com with any questions.
