It seems like there is a lot happening in all the markets this week. It is times like this when people who are not really traders get tempted to trade more than they probably should.
I do not know whether this is a bad week for stocks or if this is the turning point for a correction or a bear market. What I do know is that the market has not really moved down a lot. I also know that bear markets start by rolling over and last on average for many months giving plenty of time to reduce exposure consistent with what is hopefully a strategy to get defensive that you planned early on.
Long time readers will know I have tilted defensive for a while so I have no trade to do for now.
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3 comments:
Although his trading time-frame is usually quite short, Charles Kirk (Kirk Report) probably captured the entire past year when he commented (http://tinyurl.com/2rna4e), "... if we've learned anything from this market so far this year is to fade both the optimism and pessimism."
This has definitely been a watch-the-grass-grow market.
I just looked at a chart of the S&P 500 and focused on periods of 6+ months where the market made steady gains with low volatility:
6/70 - 4/71
4/80 - 11/80
8/82 - 6/83
9/85 - 6/86
11/88 - 10/89
7/96 - 2/97
12/95 - 5/96
10/98 - 7/99
3/03 - 3/04
What happened when stocks peaked? For the most part, they didn't fall off a cliff. They either corrected moderately before a subsequent ascent or prices rolled over - long periods of choppy trading with an overall downward bias. Granted, in some instances the market eventually sold off. For example, after the 4/80 - 11/80 climb, the market didn't really sell off big time until 8/81.
We tend to remember the big price shocks: 73-74, the 87 crash, 2000-2002, but none of those periods were preceeded by "smooth" uptrends like we've seen the past 6 months.
All that said, I think upside potential is limited. But as Roger always reminds us, it doesn't pay to make big bets.
Roger, have you held MIC long enough
to determine if it is best suited for
a taxable/nontaxable account? Are the
distributions primarily qualified
dividends?, return of capital?
Thanks for all your info.
Jay Charles
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