Still Some Warts

by Michael Cintolo on August 27, 2014

This is an excerpt from Cabot Market Letter, where we’ve been picking the best growth stocks since 1970. Cabot’s flagship advisory combines expert stock selection and award-winning market timing. This is the most complete, and most helpful, growth-oriented investing advisory available at any price.

We’re impressed with the market’s recent action; the stars were aligned for a meaningful decline after a month of choppy, distributive action and sell signals from our Cabot Tides and Two-Second Indicator. But since getting going two weeks ago, the market has moved straight up, with more and more stocks hitting new highs or getting ready to.

As for our indicators, our Cabot Tides, which was on the fence last week, is now clearly bullish once again, and our Two-Second Indicator has now recorded 13 straight days of fewer than 40 new lows. Throw in our still-bullish Cabot Trend Lines, and we have to conclude the path of least resistance is up.

That said, we still feel some caution is in order, partially because most growth stocks remain in big, six-month basing phases—i.e., many have rallied of late, but only back to where they were a few weeks or months ago. Plus, some indicators like the overall NYSE Advance-Decline Line have yet to confirm the new highs in the S&P 500, and the same goes for many other indexes, which are still below their old high. To be clear, these are secondary indicators, but the point is that there are still some warts out there that the past two weeks of rallying haven’t erased.


Michael Cintolo is Vice President of Investments at Cabot Heritage Corporation, and Chief Analyst of Cabot Market Letter and Cabot Top Ten Trader. A growth stock and market timing expert, Mike is a true student of the market and a technical analysis specialist.

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