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.
Resnn Investments, LLC