The Market Is A Battleground
There are all sorts of things happening that make this a most exciting and interesting juncture. On the plus side, the major indices have set highs and are coming off a 12 month period of atypical strength and momentum. Conditions have been excellent and the question is "will they continue?". I say respect the law of inertia.
But then the worries creep in...subprime and other mortgage woes ala Countrywide & Bear Stearns. Earnings misses from TXN & DuPont. Earnings worries from AAPL. The market responds with a 2-3% decline and EVERYONE is up in arms. The end is near, take profits, wait for lower prices, its almost too much to bear!
The market is a battleground! Every trade matches a pessimistic seller with an optimistic buyer. We all go into a position believing we are right. Sentiment can shift quickly and the declines even faster. This is the hallmark of a bull market - scary moments that can shake you out of good stock, get you out of step, make you think you can actually time things and get back in lower. Well, it really doesn't work out too well that way. Typically the big money is made by sitting, not moving money around. This decline is difficult but that is what a bull market will give you. Look at AAPL, RIMM, AMX, DECK, & RL. There is nothing wrong with those charts. This decline is apparently no different than any of the others that have occured during the last year: a quick shakeout and then the resumption of the trend. Oh, you think you can trade out and buy it lower? That was for last week when the market logged days of no gains on weakening breadth. Now, money should be put to work unless its already invested.
There is no doubt that the end of the bull market COULD BE upon us. We won't know for some time. But, if you look at your stocks and they are behaving reasonably well for a correction then there is one thing to do and that's stay with it. Be realistic about the portfolio and you will note weakness creeping in. At GCM we are reevaluating favorites like GS, X, GOOG, and SCHW. Are they simply consolidating their moves and'waiting' for the 50 or 200 day XMA to catch up? Or, more likely for GS and a host of financials, something potentially more dangerous that's not worth sticking around for. Portfolios always require attention and pruning, sometimes more than other times. High probability that this time is fairly typical for a bull market that's run for 12 months straight. Or, as the expression goes, a storm in a water glass.
The New York Times led off the business section with a bearish article about rising mortgage delinquencies. Enough to make you run for cover. But I'm betting that the strength in the global economies will not be run aground by a statistically small % of US homeowners failing to make timely payments on their mortgages.
Enough said...take me to the bell and AAPL's earnings...
But then the worries creep in...subprime and other mortgage woes ala Countrywide & Bear Stearns. Earnings misses from TXN & DuPont. Earnings worries from AAPL. The market responds with a 2-3% decline and EVERYONE is up in arms. The end is near, take profits, wait for lower prices, its almost too much to bear!
The market is a battleground! Every trade matches a pessimistic seller with an optimistic buyer. We all go into a position believing we are right. Sentiment can shift quickly and the declines even faster. This is the hallmark of a bull market - scary moments that can shake you out of good stock, get you out of step, make you think you can actually time things and get back in lower. Well, it really doesn't work out too well that way. Typically the big money is made by sitting, not moving money around. This decline is difficult but that is what a bull market will give you. Look at AAPL, RIMM, AMX, DECK, & RL. There is nothing wrong with those charts. This decline is apparently no different than any of the others that have occured during the last year: a quick shakeout and then the resumption of the trend. Oh, you think you can trade out and buy it lower? That was for last week when the market logged days of no gains on weakening breadth. Now, money should be put to work unless its already invested.
There is no doubt that the end of the bull market COULD BE upon us. We won't know for some time. But, if you look at your stocks and they are behaving reasonably well for a correction then there is one thing to do and that's stay with it. Be realistic about the portfolio and you will note weakness creeping in. At GCM we are reevaluating favorites like GS, X, GOOG, and SCHW. Are they simply consolidating their moves and'waiting' for the 50 or 200 day XMA to catch up? Or, more likely for GS and a host of financials, something potentially more dangerous that's not worth sticking around for. Portfolios always require attention and pruning, sometimes more than other times. High probability that this time is fairly typical for a bull market that's run for 12 months straight. Or, as the expression goes, a storm in a water glass.
The New York Times led off the business section with a bearish article about rising mortgage delinquencies. Enough to make you run for cover. But I'm betting that the strength in the global economies will not be run aground by a statistically small % of US homeowners failing to make timely payments on their mortgages.
Enough said...take me to the bell and AAPL's earnings...
posted by David Geller at 11:09 AM
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