The market remains in good shape; it did pull back a bit in recent days, and could easily consolidate for a bit ahead of earnings, but the overall picture remains bright. Both our Cabot Tides and Two-Second Indicator remain clearly positive; in fact, most indexes are far enough above their 50-day moving averages that the indexes can retreat 4% or so without damaging the intermediate-term uptrend.
Moreover, we’re encouraged by some of the secondary indicators we track. On the sentiment front, we’re still seeing hesitancy among individual investors (bullishness is well below average) and fast-money traders (assets in Rydex bullish funds remains well below prior peaks), which is encouraging. And the S&P 500 blastoff signal (which we wrote about in the last issue) bodes well.
On the flip side, we’re still waiting for two things before flooring the accelerator. First, we want our Cabot Trend Lines to turn bullish—that will happen if the Nasdaq closes this week above 4,811 or so. And second, the action of growth stocks still leaves something to be desired; there remains a dearth of new highs on the Nasdaq, for instance.
All in all, we still think it’s fine to buy leading stocks as opportunities arise, and we’re doing that tonight. Our new buy will still leave us with about 30% in cash, which we expect to hold onto until more growth stocks emerge.
This is an excerpt from Cabot Growth Investor, where we’ve been picking the best growth stocks since 1970. Cabot’s flagship advisory combines expert stock selection and award-winning market timing. It’s the most complete and most helpful, growth-oriented investing advisory available anywhere.
Michael Cintolo is Cabot's Vice President of Investments and Chief Analyst of Cabot Growth Investor and Cabot Top Ten Trader. To read customer reviews of Cabot Top Ten Trader, click here. To read reviews of Cabot Growth Investor, click here.