Today’s market action failed to inspire any confidence in the overall market heading into Friday’s session. Volume fell across the board as many traders and institutions were simply not interested in plowing into stocks. Given the lack of support we are urging new investors to maintain a high cash position with their portfolios. This market is not for the inexperience. Tread lightly and keep position sizes small. If we are able to get buying interest with big volume we will change course. For now, we are going to play this market with a cautious approach.
Our ability to be nimble is a huge advantage. We must take advantage of our situation. If the market turns higher we can jump aboard quickly. However, if we are to continue to push to the downside our hedges and high cash position will certainly keep our portfolios afloat. Big institutions cannot move in and out of positions like we can. Let’s use this to our advantage. You must obey your exit signals and keep position sizes in check. There is no need to be a hero nor get reckless.
Sentiment continues to favor those who are neutral. At this point it is getting quite silly the amount of those who are neutral. AAII Bulls and Bears are essentially tied at 29%. The reset are sitting in the neutral camp. NAAIM exposure index continues to remain in the 60s with investment managers continuing to be quite gun shy with equity exposure. We certainly do not blame them given what we are seeing from this market. The theme continues, stay nimble with a big cash position.
Tomorrow will be a new day and we will be one step closer to the next Federal Reserve meeting. We hope you have a great weekend.
