Random Thoughts-Market Update by Dave Landry
To The Markets
When it comes to markets, first and foremost you need to apply the Rip Van Winkle test. Imagine that you dosed off for a few days, weeks, or months and are now just looking at the market. In the Ps (S&P 500) and Rusty (IWM) we're virtually nil for 3 months plus. The Quack (Nasdaq) is right around where it was at the beginning of August. Just like you can't catch a tan when the sun isn't shining, it's tough to catch a trend where there is none. Everyone is obsessed with either up or down but they often forget that sometimes a market just goes sideways.
With the market going nowhere fast there's not much exciting to report in the sectors either.
With the Nasdaq being relatively stronger longer-term, some tech such as the Semis are hanging in there. However, like the Nasdaq itself, it's important for these areas to make it back to new highs sooner rather than later.
Some areas such as Drugs have been headed lower. What's concerning here is that recent strong sub-sectors such as Biotech are now rolling over too.
On a relative strength basis, the Energies have been hanging in there. However, don't buy them just because they are the dog with least fleas. Wait for upside follow through before getting too excited here.
Bonds remain weak and are just off of multi-month lows. This action has kept pressure on anything interest rate sensitive such as Real Estate and Utilities. You could also argue that they are also keeping the lid on stocks in general.
So again, the sector action is mixed at best.
So What Do We Do?
Here's the hard part for the motivated. Now's the time to be patient and wait. As I preach quite often, it's better to be on the dock wishing you were out to see than to be out to sea wishing that you were on the dock. If you do take new action, just make sure that your stock isn't likely to be held hostage by the overall lackluster conditions. Right now, I'm still seeing a few speculative issues that wouldn't know a fundamental if it hit 'em in the ass. These are the ones that can often ignore the barrage of news and rising rates. There's no need to make any big picture predictions at this juncture. Do honor your stops and continue to follow your plans on any existing positions. Regardless of what you do, constantly work to get better at what you do.
May the trend be with you!