Another productive week for the market. As you see
above, we exited margin and went back to just 100% invested. For those of
you that have do not have margin accounts, there was no change in your
allocation; you were fully invested at the start of the week and you are fully
invested at the end.
As you have heard me say before, margin use should only be
used in opportune times when the market indicators are all aligning
nicely. Since being on margin increases the risk on your account
substantially, we only want to use it sparingly. So … with the increased
volatility that we have seen this week mostly as a result of the Ukraine
situation, I feel it is best to remain off margin for the near term. We
are still fully invested (100%), and I still feel the market is acting very
healthy, just took some of the risk off the table. Protecting your
account from decline will always be our number one goal, paramount to
generating profit.
Looking at the previous week, the market had a huge decline
on Monday from the Ukraine uncertainty then bounced back on Tuesday completely
erasing all the previous days’ losses. Our analysis did not show dramatic
selling pressure on Monday and so we did not feel any change was necessary in
our accounts. As the week has progressed we have seen an increase in
selling although nothing that causes too much concern at this point.
The market continues to act fairly well with the only
concern cropping up being that investors are starting to get complacent
again. Although we do not use market sentiment in our analysis, it is
just something to note that when there is too much bullish conviction in the
market it can lead to a pullback. Market sentiment is a ‘secondary
indicator’ which basically means that it isn’t reliable enough to use as a
trading signal, but that it a warning sign of a potential problem down the
road.
Hope you have a wonderful and safe weekend.
Respectfully,
Randall Mauro
Resnn Investments, LLC
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