Close Your Eyes And Buy

Random Thoughts

On Friday, I wrote: With trends, you’re much better off in an accelerating one then in one that’s decelerating. An accelerating trend means that there are new buyers coming into the market. A decelerating trend means that there are still buyers but there’s not as much pent up demand. One has to wonder if this lessening demand will eventually exhaust itself.

Yet, the market continues to drift higher. On Friday, the Ps (S&P 500) gained a whopping .17%. Nevertheless, this is enough to keep them at all-time highs.

The Quack gained nearly a ¼%. It is just shy of 14-year highs.

All wasn’t completely boring, the Rusty (IWM) had a decent day, it tacked on exactly ¼%.

As I have said ad nauseam lately, what is, is. The market is still going higher. Don’t question it too much but do pay attention. The loss of momentum is somewhat concerning but as long as it can stay at or near new highs, there’s no need to take any drastic new action. Do continue to honor your stops just in case and do take partial profits as offered.

In Louisiana, we just had an election where one candidate said, I know you might not like me but just close your eyes and vote for me. You might not the market action, but as a trend guy, you have close your eyes and buy.

Some day this trend will come to an end. Again, we can’t have eternal sunshine of drifting higher forever. The good news is that you don’t have to figure it all out. Stops will keep you in if we do continue higher and stops will take you out if we don’t.

As usual, do pay attention to clues. Right now, I’m seeing more positive action than negative.

It seems like as soon as areas start to look a little questionable they come roaring back. The Banks, especially the Regionals, are a good example here.

Speaking of financial related, the Financials blasted to new highs with vigor.

Most areas remain in uptrends and at or near new highs. These include but not limited to: Defense, Automotive, Computer Hardware, Computer Software, Conglomerates, Consumer Durables, Consumer Non-Durables, Drugs, Semis, Foods, Health Services, Insurance, Leisure, Real Estate, Retail, Utilities.

There are a few notable exceptions that aren’t doing so well. Metals & Mining made new multi-year lows and Energies are just shy of multi-year lows. Again, this is why we do not bottom fish.

For the most part though, things remains positive. There are a few large cap momentum stocks from yesteryear such as GOOG and AMZN that look dubious at best but for the most part, things still look pretty good.

So what do we do? Nothing has changed just yet: Even though the indices have lost steam, the trend for now remains up. Therefore, we continue to follow along like good little trend followers. Avoid the short side unless you think you have the mother-of-all setups. Regardless of what you do, again, take partial profits as offered and honor your stops. It never ceases to amaze me that the market itself via protective stops will keep you in the winners and take you out of the losers. Think if you must but let the market be the final arbiter.

Best of luck with your trading today!

Dave