This morning we have seen the expected gap breakdown in the S&P500 Index and other US indices, which appears to confirm
our interpretation over a week ago that a “Dumpling Top” was forming. This is now a very dangerous situation that could quickly turn into a bloodbath, and when you see the sort of action you are seeing today after a long period of quiet, it frequently leads to a rout the following week. Accordingly all of our broad market holdings should be sold at the first opportunity, as regardless of how positive their fundamentals, they are likely to get caught up in this maelstrom, and in any case we can always buy them back later at better prices once the dust has settled. A few of our broad market holdings have not done much, but some have excelled and made excellent returns.
In particular, you should take profits in the following stocks…
Catasys Inc CATS $1.37
While it still looks great fundamentally, Catasys is likely to get dragged down by the market falling. We have good profits in this which should be taken with a view to buying it back later after a significant reaction back to support.
Comstock Resources CRK $8.05
We have almost doubled our money in a month in this, but with the broad market possibly set to crater it is considered prudent to take profits and see what happens. If it reacts back hard we can buy it back.
Eguana Technologies EGT.V C$0.34
Eguana has been dragging its feet in recent weeks after strong early gains, and with its upside momentum waning, is increasingly vulnerable to a selloff. We have good profits in this which should be taken with a view to buying it back later at a better price.
Pioneering Technology PTE.V $0.65
This has done very well in recent weeks, having more than doubled. It is now critically overbought, so we are at an opportune time to take profits as a retreat by the broad market is expected to trigger a wave of profit taking, and we might as well be among the first out the door.
Select Sands SNS.V C$0.48
We have a relatively modest but useful profit in Select Sands, which can be expected to evaporate if the broad market rout continues. Take profits immediately.
UGE has not performed and should be ditched…
UGE International UGE.V C$0.35
UGE is down slightly on our entry point. Ironically it is up 9% today, but it should be sold as its overall trend remains down and it is likely to get caught up in the broad wave of selling.
End of update.
Posted at 12.50 pm EDT on 9th September, charts added at 2.45 pm.