Uptrend continues
The trend continues as stocks close out the day near the highs of the day as volume ended mixed. Price action continues to be bullish despite calls from many who believe the market is overbought. Financial stocks were big winners today as a positive Portugal bond auction was observed. However, the trend is established in the financial stocks. NYSE volume rose on the day, but the NASDAQ slipped under yesterday’s level. While not ideal, volume continues to be positive for the market overall. Our trend continues and fighting it will only leave your account in ruin.
In “Money Never Sleeps” Gordon Gekko states “ride the trend, but do not try too hard for the turns” (not an exact quote, but it’s the gist). So many often get caught up in trying to “pick the top” or the “bottom” they lose sight of the overall trend. During the Bull market from 2003 through 2007 the market would correct itself 15-20% over a period of time. But, the danger is trying to jump on the turn too quickly or worse yet anticipate it. There will be signs of a pending correction with leading stocks stumbling and the NASDAQ flashing distribution and stalling action prior to the actual turn itself. Until then, continue to ride the trend.
No one knows the future, but the yields on the 10 year and 5 year treasury bonds are beginning to look like they are about to embark on a mission to higher ground. Many have speculated about the demise of the Bond market and have tried to anticipate the turn. The number one mistake many will make is really two things. Buying because of a feeling and the other is not cutting their losses. There are rules to follow when buying, but the same holds true for selling. Stick to them.
Being away from writing commentary was a nice break, but reality sets in and it is back to business. Most of the commentary coming from the financial media is simply noise. Opinions are worth zero to the market despite what the “smartest” of people may think. We are after returns, not risk adjusted returns and is precisely why we operate under our rules. Our strategy does not rely on feeling, only fact. Emotions can ruin you as a trader, look at Jesse Livermore. A man who is a legend in trading, but at times let his emotions get the best of him and he lost his fortunes. Strip emotion from your decision making and stick to the rules!
