Let me get this straight, a country roughly the size of West Virginia that’s a little sketchy on whether they will make a 1.7 billion dollar payment to someone they owe and our market loses about 300 billion? I’m sorry, I have confused the issue with facts.* True, market’s do tend to sell first and then ask questions later but in the big picture scheme of things, is it really a big deal? If you’re like me, you probably pulled out your atlas—anyone remember what that is?, well, Google Maps, to gain a little perspective on this little Mediterranean country. Don’t get me wrong, I have a friend there—yes, like many white people, I have 1 Greek friend. And, I hope the best for him-Godspeed! I’m sure his perspective is much different than mine. My point is that I seriously doubt that Greece will take down the world. And, if they do, High Five!
Trust me, there’s always going to be something to worry about. The media needs wars, plagues, and other things that would suggest a looming apocalypse to stay in business. More often than not, it’s never as bad as they make it. Seriously, if it were, we’d all have Ebola by now. Anyone remember what that is? Oh, if you don’t, you will soon. It’ll be back in the news before you know it.
My good friend Greg Morris does a speech where he pulls up a chart and begins listing news events: a couple of Gulf Wars, Long Term Capital Management debacle, the Asian Crisis, September 11, you get the idea. He then challenges the audience to find them on the chart. In my best Liam Neeson voice: “Good luck!”
Don’t get caught up in the fluff. This is not to say throw caution to the wind. Do honor your stops. He who fights and runs away lives to fight another day. Yes, we got taken out of a few positions lately, but so what. Every trade ends somehow. This opens up slots for new opportunities. Oh, I still drop the occasional F-bombs but as I get older and older I tend to get less excited about the zigs and the zags and just follow along. We get paid to trade. Again, every trade will end. The good news is that new one will begin.
The market is not going out of business. There will be new opportunities.
Speaking Of The Market
Now, don’t get me wrong. In my best Marsellus Wallace voice, “this market is pretty freaking far from okay.”
A week or so ago the Ps (S&P 500) was flirting with the top of its range which is just shy of all-time highs. Now it’s probing the bottom of its range. This also equates to its well watched 200-day moving average. As written before, often market techncials will come together at the same point. Now, this isn’t a line in the sand but it certainly would be a point to watch. A break below these levels, circa 2050 would be concerning. The previous trading range would then become supply, so called “overhead resistance”—reminds me of the joke about the hardware store located below the brothel that went out of business because, oh, sorry, I digressed (if I make just one of you spit your coffee onto your monitor, I have done my job).
The Quack (Nasdaq) which recently broke out has come back in. It still has a ways to go to make it to its 200-day but obviously has stumbled latley nonetheless. I wouldn’t worry too much as long as it stays above 4800 or so.
The Rusty (IWM), like the Quack has also sold off fairly hard. And, like the Quack it too has come back in after recently breaking out. Bummer.
The carnage in the sectors is, to coin an oxymoron, is pretty ugly. Hey, an oxymoron from a Trend Following Moron (Sorry Greg. Greg asked me a while back to stop using the word moron in the same columns where he is mentioned). Those that were trying to break out to new highs-like the Quack and Rusty—have come back in. Banks and Biotech are good examples here. Some like the Semis have broken down out of the bottom of their ranges. And, many others such as Retail are sitting on that ledge.
Metals & Mining have broken down to new lows decisively. This is yet another testament for not trying to catch a falling knife. What’s amazing here is that the world’s coming unglued and Gold doesn’t seem to care.
So What Do We Do?
Well, first, honor your stops on existing positions. Sometimes you have to be willing to let the market take you out and then, like Tosh and Jagger: “Pick yourself up, dust yourself off, and start all over again.” That’s okay. See the aforementioned fight and run away thing. Do be super selective on new positions. Out of several thousand stocks in my tradable universe, I’m only seeing one that I think might be worth a shot. We might have to sit on our hands for a spell. Sometimes you just have to wait. I don’t want to be Petty but sometimes, “The waiting is the hardest part.” Be patient and again, don’t get too caught up in the news.
Best of luck with your trading today!
*www.donotconfusetheissuewithfacts.com and www.dontconfusetheissuewithfacts.com
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