Early morning selling gave way to buyers pushing stocks to their highs just after one in the afternoon. Sound familiar, indeed yesterday’s stocks flashed highs just after one in the afternoon only to give way to sellers. Once again, the market pulled back from its highs made in the early afternoon hours finishing just above the mid-point of the session. Volume ran lower across the board as institutions were uninspired by the market’s performance to jump back into the market providing the much needed boost. The market’s added to its gains, but without proper follow through we still will proceed with caution.
There is a misconception amongst the trading world where many individuals believe you need to be in the market 100% of the time to make money. Many mutual funds have maximum cash levels in their charters making sure they are invested in the market. This is a fallacy, you do not need to be in the market 100% of the time. Majority of us are not managing over $100,000,000 as many are managing less than one million dollars. Therefore, rather than trying to act like you have a large portfolio act differently to take advantage of your size. Smaller accounts have the advantage of getting in and out of stocks with far more ease than ones with a large portfolio. Sitting on the sidelines to wait for the market to cough up the proper conditions for a big trend then one should take advantage of it. “Act your age, not your shoe size,” is fitting, put the odds in your favor by taking advantage of your size.
There is an abundance of data set to be released tomorrow including jobless claims and leading indicators. The market may shift its focus to the CBO budget and growth forecasts set to be released at 11:00 am EST. In addition, St. Louis Federal Reserve President Bullard will be speaking at 1:00 pm EST. The Fed President has been a notable speaker suggesting the Fed will need to do more to avoid deflation like Japan has suffered. How the market’s react by the end of the day will be important and if we power higher with volume it’ll be a clue as to the direction of the market. But, whatever direction we’ll have plenty of time to adjust and get ahead of the game.
We may have to wait until after labor day when volume tends to pick up for any real directional movement. Anything is possible here so do not get married to one side as the market will throw off hints prior to any big move. Remember, always cut your losses.
Disclosure: Long: PWER