Everyone has an opinion on the markets. These days it seems to be fairly evenly split between the pundits calling for a correction. The bullish ones saying there is nowhere else to invest, and the bears are screaming we are in an asset bubble. While many are making an articulate case for their beliefs, I really don’t think any have a clue! That is why I say follow the advice from one of my mentors Michael Burke, who recently retired from Investor’s Intelligence. Michael reminded me to simply look at the clues every day with the fresh eyes of a detective. Pay attention to the market and you will be fine.
When I say “Pay Attention to the Market”, I don’t mean just the averages – Dow Jones, S&P 500, etc.– I mean look at the “internals of the market.” By that I mean look at the advance decline lines, new highs/new lows, sector rotation, and the week-to-week changes in these areas. If you are reading the papers for the last fives years, it has been hard to stay invested in the stock market. If you are following the internals of the market, it has been hard to not be invested.
To me, the market feels ripe for a real correction, maybe even more than 10%. For sure there are escalating unrest in the Middle East and in other area of the world as well. If things became unglued we really should not be too surprised. For now, I have several shorts in my portfolio, but I am weighted more long than short. I have a hard time not being invested in the “Top Ranked Magnet® stocks” that continue to show great positive price momentum with all this bad news around. These companies have such great fundamentals, I do not want to get caught up thinking about the wrong things.
Should the advance/decline line turn south, the number of new lows accelerate, or down-side volume kick in, I will get more defensive. For now, I am watching the market and my portfolio, and I like what I see! I watch my portfolio like a hawk and should any company break down, I will stick to my stop-loss signals. As always, I’ll share ideas in my portfolio that look promising here.
By Jordan Kimmel, Chief Investment Officer at Investview, Inc. (INVU).
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