Just when we thought a pullback had
started...
A big day for the market yesterday reminded me how difficult is is to trade our accounts on a day to day basis. It looked as if a pullback had started. Some folks may have used Wednesday's weakness as a sign to get out, then we get a day like Thursday.
Chart provided courtesy of www.decisionpoint.com
I was thinking we had a few weeks left to this rally but I have to tell you I am a bit worried. Being worried doesn't mean much as that is a good attitude for the herd to have in order to keep the market going (i.e., climbing the wall of worry). But I have to tell you I am getting flashbacks of last July. The market had rallied for most of May and June in 2004 and I was pretty confident the S&P 500 was going to breakout to new highs. The historical data for early July was very strong and I stubbornly watched the market dive for over a month, beginning in that "strong" first week in July.
Deja vu? Here we are in a similar situation. We've had a five week rally and are heading into the historically strong first week of June. My head is saying, "Don't give back the nice gains you made in May." But my indicators say, "Hang tough. We have a few more weeks to go." My indicators are much less emotional.
Next Tuesday is one of those days where the seasonality chart tells us the last day in May is typically very strong but the day after Memorial Day is on the weak side. Not much help. The indicators are getting a bit stretched but they tend to be early if anything. That is why things are pointing to the latter part of June as a better time to get out. I don't see a clear sell signal just yet.
I don't believe the market is quite as strong as it was last fall, but if you look at the late October through December rally in the chart above, you can see similar strength that seemed relentless. I had a difficult time staying invested and actually did go as much as 50% in the G fund at times during that rally. There were a couple of bumps and unless you timed those pullbacks perfectly, staying invested the whole time was clearly a wise move. I think we could get a pullback or two along the way to the end of this rally. You have to decide if you want to let it ride or try to time things.
That's all for today. We've had a nice run. If you are getting concerned, taking a little something off the table is always an option. It's never easy, is it? Currently 65% C, 35% S fund. Until next time...
A big day for the market yesterday reminded me how difficult is is to trade our accounts on a day to day basis. It looked as if a pullback had started. Some folks may have used Wednesday's weakness as a sign to get out, then we get a day like Thursday.
Chart provided courtesy of www.decisionpoint.com
I was thinking we had a few weeks left to this rally but I have to tell you I am a bit worried. Being worried doesn't mean much as that is a good attitude for the herd to have in order to keep the market going (i.e., climbing the wall of worry). But I have to tell you I am getting flashbacks of last July. The market had rallied for most of May and June in 2004 and I was pretty confident the S&P 500 was going to breakout to new highs. The historical data for early July was very strong and I stubbornly watched the market dive for over a month, beginning in that "strong" first week in July.
Deja vu? Here we are in a similar situation. We've had a five week rally and are heading into the historically strong first week of June. My head is saying, "Don't give back the nice gains you made in May." But my indicators say, "Hang tough. We have a few more weeks to go." My indicators are much less emotional.
Next Tuesday is one of those days where the seasonality chart tells us the last day in May is typically very strong but the day after Memorial Day is on the weak side. Not much help. The indicators are getting a bit stretched but they tend to be early if anything. That is why things are pointing to the latter part of June as a better time to get out. I don't see a clear sell signal just yet.
I don't believe the market is quite as strong as it was last fall, but if you look at the late October through December rally in the chart above, you can see similar strength that seemed relentless. I had a difficult time staying invested and actually did go as much as 50% in the G fund at times during that rally. There were a couple of bumps and unless you timed those pullbacks perfectly, staying invested the whole time was clearly a wise move. I think we could get a pullback or two along the way to the end of this rally. You have to decide if you want to let it ride or try to time things.
That's all for today. We've had a nice run. If you are getting concerned, taking a little something off the table is always an option. It's never easy, is it? Currently 65% C, 35% S fund. Until next time...
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