- If the day is bullish it will definitely be a selling day for me.
- Value stocks seem eager to give us even better prices in the week ahead, especially those with growth potential.
Futures are in the green looking like it could open higher this morning. The Nasdaq and the S&P 500 are still both within 1% of record highs as the market seems ready to make more bullish bets.
The dollar down which remains bullish for the energy sector to end the week. Treasury yields are down this morning after yesterday’s auction but still remain a threat as the market continues to push higher.
Value stocks seem eager to give us even better prices in the week ahead, especially those with growth potential. The S&P 500 GARP Index ETF (SPGP) is showing signs it could go just a bit lower before the turn around.
What I’m Thinking For The Day
If the day is bullish it will definitely be a selling day for me. I’m looking to close positions out and sit on the cash until later this afternoon when speculative net positions are announced for the S&P 500.
If the net positions come in considerably higher then I will know I can research bullish positions going into next week. If they come in lower, I will prepare myself for possible shorts on the tech sector and the Nasdaq next week.
As mentioned on yesterday’s stock talk Energy, Financial, Industrial and Basic Materials are furthest off from their 52 week highs right now and should have the most opportunities. Looking at the market these sectors are providing the best valuations, with lower PE ratios and Price to Book than the overall market.
Communication is the only sector that sits near all time highs right now that is still showing it can provide value, so keep an eye our for some growth at a reasonable price in that area.
What You Should Be Aware Of
Be cautious as this is a time in the market where things can come tumbling down in a heart beat. Over 95% of the Market is trading above book value and over 85% of the market is trading at two times their book value or higher with a Price to Earnings of a 40 or higher.
This is still an overbought market with high valuations, a lurking threat of rising interest rates and safer investments with similar yields waiting for the day Wall Street decides to correct itself.
Also be aware of insider selling as this can be a sign that these individuals are afraid of what’s coming next. That could be correction of heavily mispriced stocks, poor earnings reports that lead to devastating collapses or even bankruptcy.
Also be aware of glory seeking, investors and fund managers who love to pitch their plays to the open public often times it’s a bait and switch. Ark Invest CIO Cathie Wood sold off over $130 million in Tesla stock this week while she sat on Yahoo Finance with a straight face and told the world to buy. This doesn’t help her case that Insiders were also selling at the same time.
Protect yourself by following only your due diligence and research. Don’t just get into a company because the share price has moved get into it because the stock has room to grow, is cash flow positive and using that money to expand. Invest in companies who’s share prices move because they proved their worth.
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