Here is a note I sent to Educational Members tonight (Thursday, January 14th). Please keep in mind that I will not regularly update this blog with my current market thoughts. I am just trying to give people a feel for the type of detailed analysis I am providing with my educational product. If you are looking for regular real-time market analysis and stock idea generation, please visit the following link to sign up: https://joefahmy.com/investor-education
As I mentioned in recent videos, I was planning on reducing my exposure this week if we saw continued strength. I took advantage of the strength in many of our stocks this week and locked in some profits. I can’t repeat this enough: I am NOT turning bearish. I am simply locking in gains. I am also giving you visibility to my process of taking gains into strength and having some cash available for the inevitable pullbacks.
Going back to mid-November, I discussed increasing my exposure into the potentially favorable seasonality. Traditionally, November through January are strong months for the markets. I discussed several times that I would increase my investment levels further during the Santa Claus rally because there were so many stocks acting well, and also during this OpEx week. I am very grateful that things worked to plan.
From here, I wouldn’t be surprised to see a pullback during the second half of January. It’s been absolutely insane to say anything negative about this market because it’s been so resilient. However, so many stocks are currently extended from proper buy points and many sentiment measures are showing high levels of bullishness.
The decisions you make from here should be based on your own timeframe and overall investment objectives. If you are a longer-term investor and have strong entry points on your stocks, then stick with your plan. For example, the two recent spotlight stocks are up approximately +15% from their buy points and I still like them longer term (and I still own them for clients). If you are a shorter-term or tactical trader, there’s nothing wrong with raising some cash. You can do this by reducing the number of positions you own (especially the ones that haven’t participated in this rally) or by reducing the size of your positions. I am not encouraging shorting because the market is incredibly resilient.
Again, I am by no means bearish. I had a very strong year for my clients last year by adhering to my plan of taking gains into strength and putting cash to work at logical support levels. I am trying to do the same now because I am off to a strong start this year. If the market continues to grind higher, I am not too concerned because I still have exposure. I’m more looking forward to seeing which stocks hold up best and using relative strength if the market has a pullback. Good luck and I will discuss this further in this weekend’s video.
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Disclaimer: This information is issued solely for informational and educational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. None of the information contained in this video constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. From time to time, the content creator or its affiliates may hold positions or other interests in securities mentioned in this video. The stocks presented are not to be considered a recommendation to buy any stock. This material does not take into account your particular investment objectives. Investors should consult their own financial or investment adviser before trading or acting upon any information provided. Past performance is not indicative of future results.