Stocks: Bull Market?
Hello everyone... After reading all of your very kind comments and emails, it appears many of you would like me to continue updating my blog even if it means only posting once a week. Posting once a week or whenever I have some free time is something I think I can handle. So with that in mind let the updates begin!
I don't know about you guys, but so far this month has been very difficult to trade from the long side. Yes, I know the dow has been going up just about every day but I've been losing money long!.. I have actually lost a lot of money trying to buy this market. Fortunately my shorts are doing very well so this month isn't a complete disaster, but trading has been very difficult in my opinion. I'm curious to know how all of you have been doing so far this month.
If you look at the above chart, you will see the NASDAQ and the Dow Jones Industrials. Notice over the past 4 weeks how the dow has been moving higher just about every day yet the NASDAQ is moving sideways. A real bull market in my opinion should be led by financials and tech stocks, but that simply isn't what we are seeing. The dow is leading us up and that always makes me cautious about buying this market. The fact that I haven't made any money long and my shorts are doing very well leads me to believe that a market pullback is probably in the near future.
I will continue to buy the strong groups with caution on pullbacks and short the weak groups on rallies, but buying this market has not been profitable for me at all. Maybe that's a sign of things to come...
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7 comments:
I went 100% to cash this week...
I'm not sure that I'm going to stay out for a bit, but I felt the need to step back and take a look at what the market is doing.
Great!
Even 1 post per week is good as long as it tells something you think is the most important of what you saw.
Welcome back, Kevin.
I always appreciate your candor and insight, regardless of the timing.
If you get a chance, I would be interested in hearing an overview of how you determine when a sector is strong enough to buy or weak enough to sell.
Hi Bill,
I determine the strength of a group by comparing the price action to the S&P.
If for example the S&P makes a 4 week low but a particular group does not break low, it is clearly stronger than the S&P and might be worth buying.
You can also look at percentage moves. If the S&P rallies 3% over a given length of time but a particular group rallies 10%, this group is stronger than the S%P and might be a good long on the next dip... I hope this helps.
Dear Kevin, welcome back! It's great to see you. I barely broke even in April despite the so-called bull market, and chose to go to cash early on this month in anticipation of "sell in May go away." Apparently not an issue thus far!
Kevin,
So glad you're posting again; love your insights. Once a week or whenever is much appreciated.
Best,
Thomas
Kevin, good to see you posting again!
I agree, this has been a difficult bull market to profit from. I have had a few winners, like AAPL and MTOX, but have seen quite a few break down after earnings (WFR, HWCC, HURC). Also, solar is turning down, and that was one of the few tech sectors that was leading.
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