Tuesday, July 06, 2010

Patience - Not The Right Time To Buy Back In - Cash is Still King

As great as today may seem on the indexes, there isn't much follow through on the few leaders that have held up.  You'd like to see at least one or two stocks attempt to breakout and hold those breakout levels.  While this can still happen today, the market seems to be working off the excess sell off it experienced over the last two weeks (buy the rumor type buying ahead of the European bank stress tests).

After completing my markets model this weekend, I have no hope for a new rally beginning this week.  Too much damage has been done, and too few leaders are left in tact.  I would advise most to stay in cash or short if you know how, but do not initiate long positions.  There will be plenty of time when the time is right.

The downtrend in the Euro/Yen conversion still dominates the market.  Until we decouple we will have a hard time rallying.

For now just take a break but continue to work on your buy list.  It will be frustrating as a day like today will make you feel like you've missed something.  Don't worry, you haven't.  Another point of frustration will be when the stocks on your lists that look promising breakdown and you'll have to start from scratch.  That is all a part of a bear market.  The good news, if you keep up, when the timing is right, you will be prepared and the first one out of the gate.

PS
There isn't much to write about these days so I will post when I feel something is relevant.  Hope everyone enjoyed the long weekend.

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