Yes, this powerful V-shaped rally following the last sell-off has put the stock market into an “overbought” position. Judging from every technical indicator, the market should consolidate or experience a wiggle lower. I believe most investors will be unable to benefit trying to time any sell-off here. So even though I am suggesting some short-term weakness around the corner, I don’t think you should even care.
The trend of this market is clearly higher. We are now firmly in the middle of the best part of the Presidential Cycle that should last for another six months. Before the next bear market comes (and it will someday) we will probably see DOW 20,000 and a new all-time high for the NASDAQ!
The key is always stock selection and owning the right companies. The second-most important key to successful investing is finding proper entry points. It is just too emotionally draining for most investors to sit with big losses, even if the company you invested in is a “good company”. Using my Magnet® Stock Selection Process, I am currently identifying many great companies. The only problem is that most are short-term extended in price and I need better entry points for new money.
There seems to be real opportunity in small caps and within the energy sector. If you are really patient and a “deep value” investor (which I am not) you can start taking partial positions in names you are very comfortable with. I need the combination of growth, value, and momentum. I have found myself to be more selective than ever right now.
I am very happy with our current positions, holding much more cash than I am used to, and not too worried about sell-offs here. My guess is that we see a sell-off and yet higher prices by month’s end.
Longs: Lannett Company, Inc. (LCI) , Microsoft Corp. (MSFT) , Pilgrim's Pride Corp. (PPC) , Gilead Sciences Inc. (GILD)
Shorts: Quality Systems Inc. (QSII) , Carmike Cinemas Inc. (CKEC)
By Jordan Kimmel, Chief Investment Officer at Investview, Inc. (INVU).