Market Update 7/23
I have received quite a few e-mails recently asking if I am still cautious on the market near term as the S & P grinds higher & higher. Most have cited that we have surpassed the high of 1687 that was put in during May and therefore have clear sailing from here..
The market has demonstrated exceptional breadth and scope during this run , a fact that can't be dismissed. However , taking some profits , trimming positions with big gains and selling options to create income are proven methods to increase performance over time..
I am of course still bullish over the long term as we evolve in this secular bull market but remain wary as some of the "internal" dynamics that i watch are running out of steam.
In addition, I believe we just might be entering a period where the DC crowd takes center stage. Here is a comment I made today on a blog here at SA
"John,
Yesterday I mentioned we are entering into a period where the politicians will start to take the spotlight.. A period where we will see "rhetoric" now from both sides. My guess is it will be a replay of the same nonsense we went thru last Oct - Dec
Media will play this up, the volume will be turned up to "high" for the"noise" meters.
Some wonder what may slow down this bull rally -- may I suggest it just entered the room ..
Of course the media will cite the negatives, and totally ignore that what is REALLY happening is a normal pause after a huge run.
If they talk long enough it will give those that have missed a part of this historic run a chance to get on board.. The Bull market has a lot more to run..."
Sequestration, budget deficits, political posturing from both sides , will have many investment managers looking at what unfolds and decide to take some "off the table" - after all it is summer time , most have made their "year" and why not wait until the talking heads go away in the fall.
I can't predict the magnitude of any pullback , there is still a lot of money waiting to enter, will it wait or will it follow quickly to keep pullbacks contained to 5-6% ? That is the $64,000 question. My approach will be to look at selective stocks to initiate or add when I feel the value is there.
Stay tuned it may get very interesting..
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