Today's weakness triggered our sell signals and caused us to completly exit the market. Our client portfolio's are now fully in cash.
The market has been struggling over the past few weeks to make new highs, especially the technology heavy Nasdaq. In fact QQQ (an ETF that mirrors the movement of the Nasdaq 100 largest stocks) has literally not made a penny for the entire month. A rally without the support of these stocks is definitely worrisome and something that has been bothering me for some time. A sustainable rally that has staying power needs to have widespread support with all major stocks mirroring the upside move, and this is just not what we've been seeing over the past few weeks. Looking over history, no rally has continued for very long without this widespread support.
Although our trading model does not take my feelings or emotions into account since it is strictly quantitative and data focused, I do find it interesting that I am seeing various 'cracks' forming, and the data that we use to make our trading decisions is corroborating my concern ~ also showing weakness.
Although the market may continue to rise, protection is the most important rule at Resnn. You've probably heard me say ... rule #1 is to protect our client investments, and only AFTER we have achieved rule one, do we move on to the second rule ... which is 'making money'. So, for now we protect our investments by being extra cautious and sitting on the sidelines. It is quite possible we may be back in the market in a few days ... but in the mean time, I'd much rather miss a few percent move up than the alternative.
Stay safe out there ...
The market has been struggling over the past few weeks to make new highs, especially the technology heavy Nasdaq. In fact QQQ (an ETF that mirrors the movement of the Nasdaq 100 largest stocks) has literally not made a penny for the entire month. A rally without the support of these stocks is definitely worrisome and something that has been bothering me for some time. A sustainable rally that has staying power needs to have widespread support with all major stocks mirroring the upside move, and this is just not what we've been seeing over the past few weeks. Looking over history, no rally has continued for very long without this widespread support.
Although our trading model does not take my feelings or emotions into account since it is strictly quantitative and data focused, I do find it interesting that I am seeing various 'cracks' forming, and the data that we use to make our trading decisions is corroborating my concern ~ also showing weakness.
Although the market may continue to rise, protection is the most important rule at Resnn. You've probably heard me say ... rule #1 is to protect our client investments, and only AFTER we have achieved rule one, do we move on to the second rule ... which is 'making money'. So, for now we protect our investments by being extra cautious and sitting on the sidelines. It is quite possible we may be back in the market in a few days ... but in the mean time, I'd much rather miss a few percent move up than the alternative.
Stay safe out there ...
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