Friday, June 28, 2013

Market Wrap - week ending 6/28/2013

Below is a client email alert that was sent earlier today ...


A quick update on your Resnn portfolio …

CURRENT MARKET EXPOSURE: 0%
CASH POSITION: 100%

Last week’s aggressive continuation of the drop in prices that started in late May finally found a short-term bottom on Monday of this week.  From Tuesday on, the market has risen and more importantly … ‘calmed down’. 

As I mentioned in our last message (from last week), panic had set in and when that occurs the market tends to drop very quickly and aggressively.  Usually during these panic ‘sessions’ the best thing to do is to sit on the side lines and wait for the masses to calm down. 

Trying to guess the bottom is a fool’s activity, and in fact in the trading world, a famous saying is “don’t try to catch a falling knife”.  Instead of trying to guess the bottom, we prefer to protect our investment and watch the action to see if the selling is subsiding and a calm is starting to occur. 

This week we started to see that calming effect as the selling finally subsided on Monday and we had a nice rise Tuesday, Wednesday and Thursday.  The week has been fairly productive in this regard.

We are still fully in cash at this point, the market’s decline from late May is very much intact at this point and although the market action is looking better this week, more time needs to occur before we will be willing to risk assets. 

As I have mentioned previously, when markets decline, waiting and watching the first few rally attempts is very telling as to the future direction of the market, and this week’s rally attempt has been productive but not convincing as of yet.  In fact, the data we analyze is still pointing to more downside.

For now, we wait and watch on the sidelines focusing on protection vs. growth.

Hope your weekend is peaceful

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