It's Time for a Correction! OK, Correction's Over!
We'll see how the day plays out but we are witnessing a tremendous bull market. Yesterday was enough to shake out more holders. Instead, buyers are taking the opportunity to buy them while they can. Looking at the list today shows across the board buying - PCU & AAPL at new highs, GS, AMX, GD, KSU, and more, all rallying sharpyly. Its very encouraging if you are 100% long!
Some things to consider as negatives might be that the new high/low list is not expanding at the rate it was. In late April the 10 day MA of highs was at roughly 300 new names daily, now it is under 250. That's not terrible but its something to note. The new lows are a tad higher but relatively insignificant in number. The market is less overbought than it was which could be good or bad. And breadth has softened as the A/D line came off the highs but is still above previous peaks. The NYSE composite had been the indicator of choice for the last 9 months but it failed to keep pace with the mid caps nor the blue chips on this last leg. An interesting study would be to compare the new highs and lows against total issues in the russell 1000 vs the russell 2000. My guess is that there's a shift towards large cap which may explain some of the aforementioned data points.
So, what does it all mean and better yet, what do we do with this information? My focus (outside of writing this blog and enjoying my life) is on portfolio management. A portfolio must be pruned like a garden. Weed out the bad stuff, cut back the overgrown plants, put it back in balance. Over the last few weeks we sold names like CME, MENT, SKX, PG, & LIZ. They just weren't working. We pruned/sold GOOG, SCHW, MER, & JWN as we are losing patience/confidence in the upside. Finally, we pruned back big winners like PCU, RL, & took profits in ISE (on the merger news). Then we added to names like CTL, & JLL and brought on new stocks like UNM, MET, PKI, TU, & OSG. The rest of the list, which is extensive, acts well and we are simply sitting back and letting them do their thing. As the famous (and ultimately suicidal) trader Jesse Livermore said, "It's not the trading that makes big money, it's the sitting". As long as the stocks perform, we hold 'em and even add to them. If not, cut the losses.
On an unrelated front, got a great mother's day gift this year for my wife. Philips Electronics makes a terrific digital photo picture frame. It's an incredible piece of technology, affordable, and highly recommended.
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this newsletter (article), will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Due to various factors, including changing market conditions, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter (article) serves as the receipt of, or as a substitute for, personalized investment advice from Geller Capital Management, LLC. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. A copy of our current written disclosure statement discussing our advisory services and fees is available for review upon request.
Some things to consider as negatives might be that the new high/low list is not expanding at the rate it was. In late April the 10 day MA of highs was at roughly 300 new names daily, now it is under 250. That's not terrible but its something to note. The new lows are a tad higher but relatively insignificant in number. The market is less overbought than it was which could be good or bad. And breadth has softened as the A/D line came off the highs but is still above previous peaks. The NYSE composite had been the indicator of choice for the last 9 months but it failed to keep pace with the mid caps nor the blue chips on this last leg. An interesting study would be to compare the new highs and lows against total issues in the russell 1000 vs the russell 2000. My guess is that there's a shift towards large cap which may explain some of the aforementioned data points.
So, what does it all mean and better yet, what do we do with this information? My focus (outside of writing this blog and enjoying my life) is on portfolio management. A portfolio must be pruned like a garden. Weed out the bad stuff, cut back the overgrown plants, put it back in balance. Over the last few weeks we sold names like CME, MENT, SKX, PG, & LIZ. They just weren't working. We pruned/sold GOOG, SCHW, MER, & JWN as we are losing patience/confidence in the upside. Finally, we pruned back big winners like PCU, RL, & took profits in ISE (on the merger news). Then we added to names like CTL, & JLL and brought on new stocks like UNM, MET, PKI, TU, & OSG. The rest of the list, which is extensive, acts well and we are simply sitting back and letting them do their thing. As the famous (and ultimately suicidal) trader Jesse Livermore said, "It's not the trading that makes big money, it's the sitting". As long as the stocks perform, we hold 'em and even add to them. If not, cut the losses.
On an unrelated front, got a great mother's day gift this year for my wife. Philips Electronics makes a terrific digital photo picture frame. It's an incredible piece of technology, affordable, and highly recommended.
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this newsletter (article), will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Due to various factors, including changing market conditions, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter (article) serves as the receipt of, or as a substitute for, personalized investment advice from Geller Capital Management, LLC. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. A copy of our current written disclosure statement discussing our advisory services and fees is available for review upon request.
posted by David Geller at 9:41 AM
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