Investing Club: We're making a trader-like sale due in part to what a key market indicator shows

Published Tue, Mar 29 202210:01 AM EDTUpdated Tue, Mar 29 202210:07 AM EDT

We're selling 50 shares of Linde (LIN) at roughly $326.10 each. Following Tuesday's trade, the portfolio will own 325 shares of LIN, decreasing its weighting to 2.91% from 3.34%. We're booking gains in Linde this morning and downgrading our rating to a 2 following the strong recovery in share price over the past couple of weeks. At the current price, Linde has now almost recovered all its year-to-date losses and the stock hasn't traded this high since mid-January. Although we continue to like Linde's long-term fundamentals as the highest quality industrial gas company and believe the impact of higher energy costs is not as bad of a headwind as the market thinks, we're being short-term opportunistic in this position. As you may recall, we added to our position two separate times in the past five weeks, picking up a total of 50 shares at an average price of roughly $291 — read about those trades here and here . With LIN up slightly more than 10% from those two trades, we're taking off the stock we recently put on. Yes, this is a bit trader-like, but we are OK with being a little bit more like a short-term trader in the near-term due to the volatile nature of this market. This sale will lock in a gain of about 30% on stock purchased in February 2021. We're also making a sale Tuesday out of discipline. After Monday's rally, the S & P Short-Range Oscillator clocked in at around plus 6%, meaning the market is now in overbought territory. Taking a step back for a moment, the S & P Oscillator is an outside service we have been subscribed to for years because it serves as a guide to the market. It's our most trusted indicator of how to act during big upswings and downdrafts in the market. At its core, the Oscillator helps understand when the market has either become overbought and potentially due for a pullback, or too oversold and positioned for a bounce. What the Oscillator does best is call turns in the market. We followed the Oscillator's call a few times this year when the market became oversold, buying stocks no matter how painful it felt because our discipline called for it. Those were great calls as the oversold condition preceded violent bounces higher. With the S & P Oscillator now in overbought territory, our discipline says the time has come to make some sales and raise a little bit of cash, no matter how seasonally strong the current period is. We have one more thing to point out. We are aware that we have not bought any stocks for the portfolio in quite some time. We are looking to add to positions like Bausch Health (BHC), Qualcomm (QCOM), and Disney (DIS), but we must now wait for the oscillator to shake out of its overbought reading before we put fresh capital to work. (Jim Cramer's Charitable Trust is long LIN, BHC, QCOM and DIS. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

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