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.
Stocks suffered a little mid-day selling today but finished the day nearly unchanged. The Dow closed up 15 points while the Nasdaq fell one point.
The market has been acting well during the past couple of weeks, with the Nasdaq ripping off 10 straight gains (though most of them are small ones) and the other indexes not far behind. That’s kept our market timing indicators in good shape—the trend-following Cabot Trend Lines and Cabot Tides are positive, and our Two-Second Indicator has gone three weeks without recording more than 40 new lows. Throw in the fact that individual leading stocks have shown no abnormal action, and we remain optimistic higher prices are ahead.
Of course, not everything is perfect. We’d prefer to see more upside follow-through from many growth stocks that got going during the past two or three weeks. Many have just meandered sideways despite the rising market.
And, by many surveys and real-money measures, investor sentiment is very complacent—few seem worried about a big market dip, which, historically, is a harbinger of some shakeouts and potholes (if not a more meaningful top).
Those are two good reasons to not get too far in front of your skis. But at the end of the day, the most important things to us are, in no particular order, (a) positive trends in the major indexes, (b) many growth stocks standing at or near new high ground with a lack of abnormal action, and (c) making money in the stocks we own. All three of those things are in gear today, so we’re leaning bullish.
Today we’re making a couple of moves in the Model Portfolio. We’ll still be about 30% in cash, and should we see some upside follow through in a few growth stocks, we could extend our line further.
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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