Monday, February 25, 2013

caution is warranted

The market fell hard today ... with all the indexes down between 1.5 and 2%.  What's most impressive about this decline is that the market opened UP roughly 0.7% today ... so the total drop from open to close was quite severe.

If you follow our posts, we moved our clients fully to cash last week protecting their portfolio's fully from any decline, but I still wanted to write a post to encourage extreme caution if you manage your own portfolio.

The market seems to be forming a topping pattern and unless we have a seriously positive news event that changes the direction ... I think the best days are behind us and we have some definite downside coming.

As you hopefully know by now, I do not pretend that I can predict the future direction of the market, but rather take current queues from the data to identify shorter term strength and weakness.  Having said that,  using basic technical analysis to forecast out some possible outcomes of this decline ... I am expecting a minimum 5 - 7% drop from the highs that we hit last week.  If this occurs, this would wipe away all the gains of 2013.  At this point, I don't expect to see a larger fall than that ... but time will tell.

"Long-term success in the stock market is not determined by how much you make in good markets, but rather by how much you're able to preserve in the bad ones" ... protecting your capital is the most important criteria to wealth building/

If you have any questions or comments related to the market, please feel free to reach out to me directly, otherwise please be careful out there ... there are better times to be invested than now, and sitting out of the market (in cash) waiting for those moments is the most prudent action in times like these.

Stay careful out there ...

Randall Mauro
Resnn Investments, LLC

No comments:

Post a Comment