That’s the second time that sellers have stepped up at those levels during this rally, though this morning’s powerful rebound is definitely a good sign.
Among individual stocks, it’s also been a mixed bag—we actually have seen some improved action in growth stocks, with a couple of new leaders emerging, though there have also been plenty of potholes, too, with a few Top Ten stocks tripping their stops and others testing support.
All in all, we’re not changing our stance. By our measures, the market’s intermediate- and longer-term trends remain up (granted, not powerfully up, but up nonetheless), and most of the liquid growth leaders of this advance continue to act well enough.
Right now, we believe owning some high-quality leaders makes sense, as many continue to act well. But we also advise holding some cash and keeping relatively tight stops on any losers and laggards.
Following this plan, you’ll quickly get kicked out of a couple of laggards and build up more cash should the market decisively break down from here. But if the market holds up, you’ll still own your leaders, and there should be plenty of stocks to buy should the indexes decisively break out to new high ground.
For now, then, we’re still relatively neutral—we’re OK with some new buying, but it’s still about being selective, holding at least some cash and sticking to your plan so you don’t go insane chasing the market’s day-to-day action.
This is an excerpt from Cabot Top Ten Trader, which features the best trades to make every week. Designed for experienced investors who want even more great growth stock ideas, this advisory recommends the best 10 stocks each month for short-term investment by aggressive growth investors.
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.