Cabot Market Letter Editor Mike Cintolo appeared on a Yahoo Finance's Breakout video segment May 24. Cintolo was asked if a market correction underway, and replied that it looks like a correction at this point, and so he has the Cabot Market Letter 52% in cash.
Reprinted from Yahoo Finance Breakout
Now Is a Great Time to Back Off Stocks: Stock Picker Cintolo
By Jeff Macke, May 24, 2011
Mike Cintolo, editor of the Cabot Market Letter, says now is a great time to back off on stocks and let the market guide you as to when to get back in. The stock picker takes a balanced investment view, watching the fundamentals but not considering individual stocks to be in a vacuum away from the technical market. While he sees no reason for fear of a new bear on the horizon, he's become more cautious since April.
Cintolo says his cue to trim stocks was when he witnessed selling of the market leaders "on bigger volume" toward the middle of last month and the beginning of May. He isn't one to fight the big money as it exits. He'd rather sell his losers, trims his winners and wait out the selling from the sidelines.
The bull, in Cintolo's view, probably has many months to go in the big picture, but the nearer term is a time for caution. "We'll let the market tell us when it's time to get back in." Since the tape neither rings a bell at the top nor signs an all-clear at the bottom, what would those signs be? "We take it day by day, week by week," he says. When pressed on what to do if a reversal doesn't form, he says that, if the market slides for another six months, he still wouldn't be a buyer but would instead be happy to sit in cash or even sell more. No "buy the dips" for Cabot.
Those among you who feel such "market timing" ensures lagging the market long-term, note that Cintolo's speed has served him well with investors. Cabot was buying shares into early April as the Japanese crisis settled down, but Cintolo changed his tune over the last few weeks in response to the major indices starting to break down. Doing so took his firm's posture from 30percent cash to over 50percent liquid. It's a stance that allows the newest Friend of Breakout to remain cool as a pad of butter during the market waves of selling.
So what's Mr. Cool's plan during the ongoing sell-off? He's practicing what he preaches. "We'd be defensive... We are defensive," he says. "But we're not willing to start shorting stocks... We're trend followers at heart." Cintolo's trend following policy means you're not going to catch the bottom or the tops but "you're going to be invested for every major market move."
Link to Yahoo Finance video: http://finance.yahoo.com/blogs/breakout/now-great-time-back-off-stocks-stock-picker-141727740.html