Portfolio Rotation

I think some rotation in the recommend stock list I've written about here over the last couple years is now in order. I like to let a good prospect cook through market zig zags, but patience can sometimes evolve into stupidity.

One think I've noticed in my list, and in the market in general, is the behavior of the deep cyclicals. They are not acting anything like they should be 3 years into a rebound cycle. The steel stocks are not catching any kind of recovery wave, even though for the past several months, GDP and employment have surged. If we go into another cooling of the recovery as many project, these stocks will continue to do nothing, or worse. Of the 25 companies in the list, 7 of them are cyclicals, and they are uniformly showing cash-flow weakness very unbecoming a rebounder. I don't know what our market correction is going to be yet, but before the next big move down is a good point to lighten up. So I am selling these for the following profit or loss:

LABL @$20.93 +41%
KSW @ $3.76 +21%
HW @ $3.15 -39%
TAYD @$10.68 +79%
MFRI @$ 7.83 + 9%
MTW @$14.12 +6%
BOOM @$20.45 + 3%

In addition, I am moving two others to the sidelines, Rocky Brands and ARM Holdings. Rocky is not a cyclical, it is a retailer, which in general is good. But the low end and high end retailers are the good areas. Rocky is firmly in the middle selling expensive boots and work shoes. And the results lately make it look more like the cyclicals.

ARM Holdings has had a nice run, but it should be tracking Apple more closely. Instead it has gone into a prolonged consolidation formation and now looks like it wants to break it to the downside. I am going to sideline it until I see how that plays out.

RCKY @$11.50 + 22%
ARMH @$25.85 +342%

Until we see the recovery start to effect the more cyclical stocks, there will be much better selections elsewhere.