been a while
you know something, its really easy to get used to not writing a blog every day. much easier than getting used to writing one every day! the last few months have been chaotic but having managed to survive the last 3 months, and having gone from peak to peak and then some, today brought an inside-out day on the market, or something like that. this is a technical phenomenon where major indexes reach new break-out highs and then reverse to new weekly lows. today, they mostly settled somewhere in the middle to lower end of the range. volume rose which suggests the selling was more intense than recent buying. so will tomorrow bring ornery bulls back to the table to buy aggessively and reset the peak? we have seen these self-sealing markets since 2003's breakout and they can't be counted out. since this bull market started 4+ years ago we have yet to have even a 12.5% market correction so it would not surprise me at all to see a nearly immediate reversal back up.
but, the market cannot continue to go up on low volume. pre the july peak we ran 1.5-1.6B shares a day avg volume but now its been a 1.2-1.3B daily affair at most. and then today aggressive selling hit some major air pockets. e.g. rimm was on the verge of another new high off the open when selling came in. it settled down a couple of points but around 2pm it starting falling and was down about 10 PERCENT in 15 minutes. that is not healthy action no matter how you slice it.
unless of course the self sealing market resumes. its been nice to be mostly invested but right now anything that has much deterioration is going to get kicked to some extent. we did that yesterday with a few names but our average 15% cash weighting is starting to feel a little light. let's face it - this 190 point s&p 500 rally in less than 3 months (1700 dow points) will correct. with recent big outperformance its ok to book some profit from the most extended stocks and cut losses on the weakest. while the downturn should produce an opportunity it will likely be brief and one we should scale into to make sure we get some at lower prices before the rally to new highs resumes.
or, is mr. market about to kick our butts in another of the bar-room brawl type corrections we seem destined to deal with. it would be so poetic - we finally get the sp500 and dow to set record highs on the same day and a new correction begins. i don't really advocate trading that much but i cannot stop thinking about being nimble here.
i hope to write again soon.
but, the market cannot continue to go up on low volume. pre the july peak we ran 1.5-1.6B shares a day avg volume but now its been a 1.2-1.3B daily affair at most. and then today aggressive selling hit some major air pockets. e.g. rimm was on the verge of another new high off the open when selling came in. it settled down a couple of points but around 2pm it starting falling and was down about 10 PERCENT in 15 minutes. that is not healthy action no matter how you slice it.
unless of course the self sealing market resumes. its been nice to be mostly invested but right now anything that has much deterioration is going to get kicked to some extent. we did that yesterday with a few names but our average 15% cash weighting is starting to feel a little light. let's face it - this 190 point s&p 500 rally in less than 3 months (1700 dow points) will correct. with recent big outperformance its ok to book some profit from the most extended stocks and cut losses on the weakest. while the downturn should produce an opportunity it will likely be brief and one we should scale into to make sure we get some at lower prices before the rally to new highs resumes.
or, is mr. market about to kick our butts in another of the bar-room brawl type corrections we seem destined to deal with. it would be so poetic - we finally get the sp500 and dow to set record highs on the same day and a new correction begins. i don't really advocate trading that much but i cannot stop thinking about being nimble here.
i hope to write again soon.
posted by David Geller at 10:48 PM
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