So here we are with the markets once again tagging new highs, and the list of complaints gets longer. Oh, a correction is coming. We know it, but then those who are “out of the market” won’t feel any of the pain. I’m hearing that a 5% correction is coming, and that it would be healthy. Really? As I’ve said many times, it is futile to tell the market what is could and should do.
Our landscape is littered with gurus, experts and pundits giving really bad advice. CNBC started trotting out statistics on Thursday, because, well, what else are they going to talk about?
The market will tell you what to do. That being said, why even bother waiting for a correction? If I am long bullish names as I have been, I love uptrend days to unload stuff. Monday and Tuesday were perfect examples. I took advantage of good demand and higher prices in order to book winners and take losers off my board.
I’m also hearing some doubts about the economy, and of course we are seeing some rather weak data. This may portend some economic headwinds down the road (namely early 2014), but the data predicted this market six or eight months ago. However, the market is not seeing any reason to be cautious.
I heard some guy comparing this market to 1999 and a frightful end because of scary heights. Funny, I was trading in 1999 and it was one of the best years ever for the markets and for tech. Absurd price levels? You bet, and if you were short that year, you got hung out to dry. If anything, the second half of 2000 was the period to be worried about, because it predicted a miserable 2001-2002, as the bear market in tech was in plain view.
And then there are the bond market, quantitative easing and the Fed. If I had a dollar for every prediction about the process and the outcome, I would have millions. Where and when do you get in the markets? Fed policy has made equity markets a fertile playing ground for a few years, and finally, at all-time highs, people are coming around to it? This is when we see the latecomers arrive at the party — at a time when I’m exiting, if only to keep the gains I have accumulated. I won’t worry about missing out on further gains.
I am in opportunistic mode here, booking gains where I have them and picking off ideas that have potential as I read the charts and technicals. I have been making far more bullish plays, because the trend is in place for the markets to rise higher. But overall, I’m not bullish or bearish, and someone on the sidelines who is getting involved at this late stage would face challenges.
Pay attention to what the markets are telling you, turn off the noise, and you’ll be in a much better place.