Friday, July 11, 2014

Market Wrap - week ending 7/11/2014

We had an interesting week in the market.  Although we stayed fully invested, the smaller caps and leaders had a fairly tough week, yet the larger caps once again felt little pain.  I have to say that this week’s decline shouldn’t be surprising to anyone that follows the market religiously as we simply moved up a bit too fast over the past month and some steam needed to be let off.  Similar to a steam train, when pressure builds … it needs to be let out OR you’re going to have a nasty explosion … the pressure can’t continue to build forever (just as we can’t continue going straight up forever).  Of course, time will tell whether the current decline is a simple “pressure release” or something more dangerous. 

Personally I don’t like how aggressively the smaller caps and leading stocks broke down, yet with the rest of the market holding up and in particular watching technology stocks hold up stronger than the smaller shares … my fears are calmed a bit.   Yet, with this strong decline in the smaller issues, and such a divergence in the market I have a feeling we have more downside ahead of us, but for now our signals stay pointed to the north … fully invested with expectations of higher prices ahead. 

As I mentioned above, some decline is fine and quite honestly welcomed, so for now we stay invested and just watch and wait to see if the declines broaden (affecting more companies) or if it stays narrow (only affecting the riskier positions).

Hope you have a wonderful and safe weekend.

Randall Mauro
Resnn Investments, LLC

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