Take a Ritalin and Relax!

Within an hour after Tuesday’s market close, I got 5 phone calls and text messages asking me: “Have we bottomed yet?”

Here’s my response:

1) Take a Ritalin and relax! What’s the big hurry to trade??? Wait patiently for a healthier environment. One day doesn’t change anything!

2) The four signs that I like to see in a strong market are still non-existent. Stocks setting up, institutional accumulation, high bearish sentiment, and the NASDAQ Composite above its 50-day moving average. Still 0 for 4.

3) I wouldn’t be surprised to see some form of a rally over the next few days. My guess is that it will come on light volume as we are heading into a long weekend and most of the big boys will be in the Hamptons.

4) I am keeping a list of stocks “holding up well” but I don’t feel comfortable sharing that list because we are not in a healthy environment. Once again, breakouts and sloppy bases have low probabilities of working out, especially in corrective markets.

5) People keep asking me: “How can you sit in cash and not make money?” First, making money in these market conditions is very challenging. Second, my goal is not to “make money” but rather to “protect” my client’s capital. As Paul Tudor Jones says: “Play great defense, not great offense.”

Keep in mind that we will have some great winners coming out of this correction, but right now: THE MARKET NEEDS TIME!!! If you insist on trading, I highly recommend keeping your positions light. My better advice is to remain on the sidelines. That’s my position right now: 100% cash. Did you take your Ritalin yet? :)

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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