Back in December 2012, there was non-stop talk about the Fiscal Cliff. Everyone was on edge and the market would experience sudden movements on any headline or politician commenting about the year-end vote. When the vote passed, the market gapped up +2.5% on January 2, 2013 and didn’t look back. So many fund managers were left in the dust because they raised cash ahead of the event and waited for a pullback which never came. The current situation with the Brexit vote is starting to look very similar. There has been non-stop talk about the upcoming event and I’m sure it will get even worse as we approach this Wednesday’s vote.

Here’s the major similarity to the Fiscal Cliff that I am focusing on: So many leading stocks are acting well. They are pulling back on light volume and staying within their strong technical ranges. The reason I stayed invested back in late 2012 was that I learned many years ago to shut out the noise and focus on the price action of leading stocks. Back then, many leading stocks were holding up well despite the “scary” headlines that created a high level of fear in the market.

The most important thing I have learned in my career is to focus on the price action of the leading stocks. There are times when the major averages look great, but the leaders are not acting well, and vice versa. The news, sentiment, seasonality, etc. are all important, but they are secondary to what the leaders are doing. Of course, I am not encouraging complacency, as I will get more defensive if the leaders break down. But for now, I am simply encouraging people to focus more on price and less on the noise.

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