Overall, though, the stock market continues to handle itself very well—despite the strong rally of the past few weeks, the sellers haven’t been able to make much of a dent in the major indexes or most stocks, even in the extended off-the-bottom sectors (coal, steel, oil, etc.), which have had huge moves since early February.
As for our indicators, our Cabot Tides and Two-Second Indicator remain clearly positive (now 16 straight days of fewer than 20 new lows, including just 12 today), which keeps us optimistic and leaning bullish.
That said, the two factors we wrote about in last week’s issue remain—our long-term Cabot Trend Lines are still negative, and growth stocks, while improving some during the past week, still haven’t kicked into gear.
Those aren’t bearish signs—in fact, you could argue that the rally for growth stocks is still very early, given that most are still base-building—but it does tell us not to get too far in front our skis. Plus, while we’re not big on “overbought” readings, many indexes are running into resistance around here after a great run in recent weeks.
Put it all together and we’re standing pat tonight with our six stocks and a cash position of around 40%. We do have our eyes on many stocks that we could pull the trigger on if the environment continues to improve, but for now, we think it’s best to continue going slow.
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.