We have about as many cross currents hitting the markets as I can remember. If you are reading the front pages of the newspaper, it is hard to have a single dollar invested. Between international terrorist threats, the “sputtering economy”, the European slow down, and race riots, how can you feel comfortable? But if you are looking at low interest rates, the improving job market, improving consumer confidence, reasonable valuations, and record corporate earnings, you must be wondering why everyone is so nervous.
A Bull/Bear Standoff
Right now we are seeing a standoff between the “bulls and bears”. The stock market is offering conflicting signals as well. Despite the market performing weakly, the advance decline line is holding up well – a big positive. On the other hand, the ratio of new highs/new lows is showing something else- a big negative with too many new lows to say the market is truly healthy.
I am finding enough “Magnet® Stocks” right now, and I'm holding only a modest amount of cash in our fund. I have already sold most of the smaller names, and I have also tightened my stops on the rest of the portfolio.
I still expect an “upside resolution” to emerge from this current trading range. The entire 200% up move from March, 2009 has defied the public’s expectation. The trend is still up. I have said from the start of this year that 2015 will not be a great year for the indexes. You’ll need to be nimble - and in the right stocks. It has been a market rewarding the best stock pickers and those able to “buy the dips and sell the rips”. Two steps forward and one step back still makes progress!
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