We find ourselves again in a declining market with the Dow,
NYSE and S&P500 all in negative territory for the year (again) and IWM and
QQQ (small caps and technology focused ETFs) not far above the breakeven point.
For our ‘the One’ strategy, we started the week at 100% (no
margin use) and lowered our exposure mid week to 75% invested. The market
is starting to look weak again, although I think we are very close to another
bounce up from here. We have dropped a bit too much in the past week to
not get some rally attempt.
Our longer term strategies are still both fully invested and
are waiting for more signs of weakness in order to warrant an exit. With
a bounce (up) overdue, I would assume we will not get to this exit point in the
coming week.
The market is definitely looking a bit more shaky than it
did over the previous three weeks. Down days having significantly higher
volume than up days, and the down days have larger price movement ~ fear is
creeping in. More importantly, I am starting to see many individual
stocks breaking apart, particularly the previous leaders. As I have
mentioned in the past, leaders ‘lead’, so if they are falling apart … it isn’t
too much of a stretch that that rest of the market will follow.
Volatility remains inflated which drives the fear card,
mostly driven by news events including China’s production numbers and the
Ukraine situation. And as I mentioned last week, market sentiment is
still overly bullish, which as ‘secondary indicator’ is not reliable enough to
use as a trading signal, but should serve as a warning sign of a potential
problem down the road.
I expect to have a resolution in the coming week, whether we
reverse and move back to new highs OR continue the downward slide … as we are
close to the level where a bounce should occur, and if it doesn’t then I expect
to see further downside quickly. Of course, whichever way the market
direction goes, we will focused on protecting your investments.
Hope you have a wonderful and safe weekend.
Respectfully,
Randall Mauro
Resnn Investments, LLC
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