3 Reasons Not to Sell (Just Yet)

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 |  Includes: AAPL, AEM, DE, GLD, SLV, SLW, SPY, TNH
by: Robert A. Graf

It is sort of like deja vu, but not quite all the way. The VIX is low again and most indicators have stocks as overbought. Pundits are making huge forward predictions on gold and stocks. The costs to buy puts are low and setting the stage for another correction. These are just a few of the reasons to sell, take well deserved profits, and be comfortable for a while. I wanted to share here a few reasons not to sell -- just yet.

The first one is that (1) the market tends to go a bit too far before it corrects. Some might say it has already gone too far, especially when considering the economic data, but I'd be quick to add that negative sentiment has really dropped-off.

Moreover, economic data hasn't really been that bad, and even when it is, major indicies don't fall nearly the way they used to. The only indicators that seem to really move things anymore now, thanks to the Federal Reserve, have to do with currency pairs that move the dollar. The argued movement out the dollar by the Chinese seems not to be reflected in the bid to cover ratio of Treasury sales - yet.

You'll recall the deja vu of that moving markets before. It may be that the Chinese are buying commodities instead of the green back, but there still seems to be a lot of movement into Treasuries even without the Chinese. Please recall that the Chinese are not the primary holders of our debt to this day, although I won't argue that they have the hottest economy.

So the second reason why not to sell just yet is (2) that there are pressures holding the dollar up and pressures dragging the dollar down. You'll note that the dollar doesn't just keep going down, but rather makes a comeback to some degree and waffles back and forth.

The third and final reason I'll note for not selling just quite yet is that (3) our lower dollar will inevitably cause foreign money to pour into our stock market and lift our averages. This is because we still operate and maintain the most foreign investor friendly market on earth, allowing great tax incentives for purchase anything from paper assets to real estate. Also, emerging markets are not as stable as our markets are during tense times.

So be selective and use dollars to purchase future earnings in companies that produce commodities or distribute innovative goods globally. Keep your eyes on the major themes such as agriculture, mining, and technology such as Deere (NYSE:DE), Terra Nitrogen (NYSE:TNH), Silver Wheaton (NYSE:SLW), Agnico-Eagle Mines (NYSE:AEM), Gold ETF (NYSEARCA:GLD), Apple (NASDAQ:AAPL). Continue to buy after the dips on volume going up. Don't completely sell just yet because there are too many reasons why good companies and their stocks are still headed higher.

Disclosure: Author is long SLW, DE, GLD