Last weekend, I wrote a post about the lack of “New Ideas” in this market. On Tuesday night, I posted a video saying I was “short-term cautious.” I know it hasn’t paid to say ANYTHING bearish over the past 18 months because EVERY DIP has been bought, but this pullback feels different.
I’m noticing that every rally is being sold into and there are STILL VERY FEW safe entries in quality stocks. In addition, today (3/13/14) is the third distribution day in the Nasdaq Composite in the last 5 days. A friend of mine told me not to post this memo because “you know the market is going to come screaming back and rally to new highs.” I realize that this is a possibility but I don’t care! If I’m wrong, I’ll make the proper adjustments and get back in. I have no ego when it comes to the market and my number one priority is to protect my clients assets.
My best recommendation is to raise some cash and keep your trading light. Best case scenario, this pullback does a masterful job of shaking people out and we go to new highs. I am being open minded that this is a possibility. Worst case, we start a 6 month correction that bottoms out this fall and resets many charts for a 4th quarter rally. Either way, it’s best to be defensive until we get a clearer picture. I will discuss this further over the weekend in a market video. Good luck trading!
I can be reached at: jfahmy@zorcapital.com.
Follow me on Twitter @jfahmy
Follow me on StockTwits @jfahmy