This is going to be a quick one
since … yet again not much has changed our cautious outlook since last week’s
alert.
The market continued its
rebuilding process and things actually are looking much healthier than the past
few weeks. The smaller cap and growth oriented stocks are still struggling,
but less so this week. The past few days were a bit harder to gauge since
it is the week before a holiday which lowers trading activity significantly and
makes it more difficult to use historical comparisons, but looking at
individual stocks we are definitely seeing riskier stocks starting to get some
attention again, which is a good sign.
The larger caps are still
holding up well. Although the S&P has yet to make any money since
late February, it also hasn’t lost any. The Dow tells a similar
story, not making a dime for 2014, but also not losing any either. This
lack of selling on the larger caps is certainly a good sign so far, we see lots
of larger issues consolidating the gains of 2013 and doing what is called ‘base
building’ which is a healthy ‘time-out’ for the market.
As I mentioned last week, any
time the market goes sideways for long periods of time is generally a sign that
rebuilding is occurring and usually that leads to more upside for the market,
so although I'm not certain the market is quite done repairing itself, I
certainly like how it is acting these days.
We still need the smaller caps
and leading stocks to participate in this rally attempt if it is going to
survive and they are looking better this week, although I'm not 100% convinced
quite yet.
As you saw above, our medium
term strategy did enter the market this week, showing a bottom in the market
was made, but our two other strategies are still in a holding pattern choosing
protection over risk at this point.
Hope you have a wonderful and safe weekend.
Respectfully,
Randall Mauro
Resnn Investments, LLC
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