Despite CNBC’s best efforts to create massive fear stocks continue to shrug off any attempt to sell-off in front of the possible US default. From the open buyers pushed the market higher throughout the day, even pushing the Russell 2000 to new all-time highs. So much for the fear over the US heading into technical default this week as it appears bulls are quite happy to remain long this week. Of course, this can all change as Washington can be a volatile place. There are a vast amount of possibilities that could occur and trying to determine which one will take place is simply a fools’ game. The trend is up and stocks are poised to continue to push higher and we’ll ride it higher.
There could always be the situation where the market sells off on the news. By the rumor sell the news is always a possibility. However, given we are trend followers we are trying to maximize our gains by holding. We aren’t going out trying to predict short-term turns in the market where we would be shaken out of huge gains. Not cutting losses does tremendous damage, but right behind is losing out on tremendous gains. Stick with the process and ignore the fear of losing gains.
We aren’t seeing as many great looking stocks we did prior to last week’s sell off. Given the fact we have yet to see any meaningful correction is one reason. Corrections are quite normal in the market and help recalibrate the market. Since we haven’t seen a meaningful correction in quite some time is curbing how many strong stocks we have. By no means is it at a point where we are throwing caution to the wind, but something we will monitor as time marches forward. There are still a great number of leaders out there and those are the ones we are focusing in on.
Once we do get a deal it’ll be interesting to see how the market reacts. Throwing another wrinkle into the mix is options expiry Friday. Two weeks from Wednesday we’ll get another Fed meeting. The fun is just getting started!
