Remember the Titanic?
The unsinkable ship that didn’t make it through its maiden voyage. This market is taking on the personality of being impermeable to the news. That in and of itself concerns me. I am not running from the market screaming the sky is falling, but I am proceeding with extreme caution. Yes, I have hit stops on many of my positions taking profit off the table. It doesn’t stop me from adding new positions where I see value. (see ETFs in Play) The key to sound money management is letting your discipline be your guide, not the market.
Today is the release of the Fed Minutes from the FOMC meeting. It should prove interesting. I expect to see some data on the inflation versus growth fight among the Fed Presidents. This could in turn give the market a taste of reality so to speak. This market isn’t going straight up on liquidity alone it will need viable and sustainable growth. Watch this data for some interesting tidbits of information and insight in to Bernanke’s thinking.
As you know, I believe the market will do what investors collectively determine and act on short term. Eventually those same investors come to face reality and the market adjust to the facts versus the emotions. We are in the emotions phase of a rally currently. As the facts are released and logic seeps into the process we will adjust and come to what is a realistic valuation for the markets. Remember, no matter how much you know or believe in a theory the market is in control! Don’t force your opinons on your portfolio to the point you lose money.
This is a liquidity driven rally nothing more. The fundamentals have yet to develop to the point of support at the current price levels. Thus, we will have adjustments in time. In the meantime we take what the market gives. There are upside plays still available. Take them, but use your stops and maintain clear thinking in the process.
The downside will come into play soon enough and we have to be ready to capitalize on that as well. The short term activity as this point is in control. As much as I would like to look at the longer term picture the short term is driving the markets. How this plays out will give a clearer view of the longer term outlook. See Sectors in Play for more on that view.
Looking for a soft open with the Bank of America bomb last night. They are going to raise $8 billion in a stock offering $1.50 below last night closing price! Damn the shareholders we have to deal with the government that is on our backs. Oh yea - that is the same government that bailed them out to protect the system. Oh what a tangled web we weave…
Be disciplined and focused on your goals!
