No Reason to Get Involved in the Markets Right Now

Includes: DIA, QQQ, SPY
by: Leigh Drogen

It isn’t too often that the market just doesn’t interest me. This happens to be one of those times, it’s been relatively easy for me to just say, there’s no reason to get involved. Swing traders, long and short, are getting chopped to pieces while the day traders have their glory. Markets change, and we must bob and weave with them or risk having our hard fought gains taken away from us.

I’ve been in cash for the better part of seven weeks now, save for a few short positions and a strategically placed day trade or two. I wish I could say when the time will be right to get involved in this market again, believe me, I want the opportunity to make some money. But I’m not going to press a hand I don’t have, it’s best to just sit back and chill. As I’ve said in the past, I’ll never be heavily involved on the short side in the equity market, it’s just not in my nature to do so, I can’t come in every day hoping for the end of the world. But if the market sets up short again, I’ll probably take a few quick stabs at it.

As for the long side, the leadership is getting thinner and thinner every day. So many stocks are just broken and not worth touching. The bears will eventually get to every stock, it’s only a matter of time, even the VMwares (NYSE:VMW) and SanDisks (SNDK) of the world will bow to the bears eventually. I repeat, it’s just not worth it to be playing from the long side here.

I feel like I’ve got a very good beat on this market, but one can never really know if you don’t have significant exposure on one side or the other. It’s easy to stand out of the way and collect alpha as the market falls apart and say that you’re in touch with the market. But are you really if you have no risk on? Part of my job, well, most of my job as an asset manager is to not lose money, which means collecting alpha on the downside. Yes, I’m paid to sit in cash in bad markets. Sitting out is tough though, and believe me I feel the itch every day.

In my mind I’m surfing in Indonesia, but I’m hoping that sometime soon this market pulls me back to reality with the opportunity to make some money. When that happens I’ll make sure to share it with you, and we will once again crank up the setup engine on this site. Until then, we’ll cover more technology and economic trends, talk some politics, and a few other random things.