Continued Caution is Warranted
In a Blog Post on September 22, I wrote: "If you are a trader, there is nothing wrong with raising some cash and waiting for more positive signs to appear." Since then, the market has continued to see distribution (professional selling). Last Thursday and Friday (10/2 and 10/3), the market bounced from an oversold condition and I wrote another post describing What The Bulls Need To See. Specifically, the Bulls needed the gains from Thursday/Friday [...]
What The Bulls Need To See
Today (10/2/14), the market sold off early but rallied back on strong volume. Here are my thoughts: 1) I like how the Russell 2000 $IWM undercut the low it made earlier this year (2/5/14) and outperformed today. The index has led us on the way down. Now, we need to see if it can lead us on the way up. 2) The Nasdaq Composite and S&P 500 retested the area they emerged from in August. In [...]
The Market’s Pattern The Past 2 Years
Here is a pattern I have noticed in the market about 10 times over the past 2 years: 1) The market goes on a 3-6 week run. 2) The run usually stalls when we get extended from the moving averages, bullishness increases (based on many sentiment measures), and active investment managers are aggressively long the market (based on the NAAIM survey). 3) Leaders start to break down, the market starts to correct down to (or [...]
Updated Thoughts on the Recent Price Action
I always try to keep an open mind when it comes to the stock market. I look at the positive and negative signs and adjust my investment levels accordingly. Unfortunately, I am seeing more negative signs right now and feel that some caution is warranted. NEGATIVES: 1) The number one sign I use to evaluate the health of the market is the price action of leading growth stocks. The recent selling in many leaders is [...]
My 2 Cents on the Alibaba IPO
For the past few weeks, the financial media has not stopped talking about the Chinese company Alibaba, which is going public this Friday. My biggest concern is that the retail investor is going to get screwed because they have been brainwashed that this will be the greatest IPO ever and they HAVE to buy it. Here's some historical perspective (i.e. two examples of companies that were also "hyped up" before their IPOs): 1) $BIDU - [...]
My Thoughts on Wednesday’s Fed Meeting
The Fed is NOT going to raise rates anytime soon. In their statement on Wednesday, I feel their language will remain dovish. Here are my reasons: 1) There is no question that some parts of the economy have improved over the past 5 years, but there are other parts that are still fragile (specifically wage growth, housing, and the retail sector). The last thing the Fed wants to do is raise interest rates too soon [...]