I haven’t updated my blog in a while because I have been neck deep trading this market. Back on Sunday, August 19th, I sent the following email to the people who attended my seminar earlier this year. Rather than typing up a new blog post, I simply copied and pasted the email because my stance hasn’t changed since I wrote it 3 weeks ago:
Dear Seminar Attendees,
I hope all is well. My last email to the seminar participants was on June 4, 2012. I sent it because sentiment was getting extremely negative and I wanted to offer some encouragement and remind everyone that better times were ahead. Well, that day ended up being the low for the summer and I’m pleased to see that market conditions have considerably improved since then.
The purpose of this email is to remind everyone to stay focused and take advantage of this healthy market. As I’ve always said, the market is only healthy a few times a year and I feel we are in the middle of one of those times. Back on June 15, I posted a video on my blog titled “Possible Change in Trend” where I pointed out the signs of stabilization and accumulation in the market. Since then, I slowly got back into the market and increased my exposure as conditions continued to improve. Although the month of July was choppy, we saw additional healthy price action that I described in my blog post last weekend “A Slight Change in the Market’s Character.”
Coming into last week was the most invested I have been in months. Not only are most of my positions working out well, but the sectors are broad based (retail, tech, oil & gas, housing, biotech, Big Cap, etc.). When I find tons of setups across a broad number of sectors AND the stocks are showing me a profit…well, that’s all I need to know. The doom and gloom about the economy all gets shut out and I strictly focus on price action. I am not turning into a raging bull (as I always try to keep a level-headed approach), but when I see this strong of price action, I do my best to take advantage of it. Of course, if I’m wrong and the market starts to break down, I will stick to my stops and reduce my exposure.
I realize that the market will back and fill, but I believe the pullbacks will be shallow and I wouldn’t be surprised to see us much higher by the election. Keep in mind that since 1964, the eight times an incumbent has run for re-election, the S&P 500 has gained an average of +9.7% from June to December. I don’t get caught up in all the politics, but if they want to flood the system with liquidity so that certain people can keep their jobs, I’m not going to argue with it. I prefer to take advantage of it, especially if we continue to see strong trading opportunities.
While going through my screens this weekend, I am still finding a large number of setups and secondary buy points for stocks. Again, I realize that there will be some profit taking, but this is the time to put in some extra work and effort into your trading. Don’t get caught up in trying to own everything, just stay FOCUSED on the market leaders. That will be your best chance of doing well and outperforming over the near-term.