Sell Alert : LUV

Remember what the past week feels like...because emotionally, this pretty much defines the meaning of the term "capitulation"...

It's not over yet. Next week -  which also will see the Federal Reserve meet on interest rates (Sept. 21-22) will be rough as well, I'm sure. But as I noted on Tuesday, this is ultimately what we should want, as strange as that might sound.

Tuesday this past week marked a day of heavy selling - 95% of all volume trading on the NYSE was "downside" volume. Today may well mark a similar intensity of selling volume as well.

Those are signs that people are giving up.

When folks start "packing it in"...it means a bottom is close, in my opinion - even though it may seem feel like a slow-motion car wreck right now.

A good example of capitulation is Fedex (FDX) - which is down 22% today after warning late yesterday that it was withdrawing guidance. In other words, the deteriorating economy makes it too hard to give Wall Street analysts a back-of-the-envelope estimate of FDX's third-quarter profits.

None of that should be a surprise to anyone. But when a bellwether stock like FDX loses a fifth of its value in a flash - after already losing 40% between its 2021 highs and yesterday's close - well, clearly lots of folks were hoping against hope for a better outcome.

In the meantime, we keep playing good defense - cutting losers before losses become too large (on a percentage basis in relation to a portfolio).

Sell Alert

For that reason, I'm ditching Southwest Airlines (LUV).

I thought it had bottomed but I was badly mistaken. The shares are down about 8% in the portfolio, and threatens to hit new lows next week.

But the overall portfolio loss itself isn't a big deal. With the number of shares allotted for the purchase, it translates to a not-quite 1% decline in the value of the portfolio:

Believe me, I'm tempted to let this trade right out next week's volatility. But we've played good defense all year - which is why the goodBUYs portfolio is only down 6% today versus the major indexes all down 20% to 30%.

Believe it or not, the other travel stock recommended earlier this week -  Carnival (CCL) - is up about 7% in the portfolio. Our two other positions, DistributionNOW (DNOW) and Clear Secure (YOU) are wilting today but - like CCL - have been remarkably steady considering the stock market's capitulation mode.

I'll have more to say in the Sunday update.

Jeff