Top Line: Selling continues to be met with buying. The weekend news of swine flu and banks going under brought in some selling but the Dow is still above 8000.
The worst news over the weekend caused some minor selling in the market but in the end the Dow was only off about 50 points. The sellers are just not strong enough to take this market down...yes, for a short period of time they can but the new owners of stock are not weak hands. They bought stock for a good rally.
As we look at the last few weeks, the market has very much marked time. We have called the flat action a correction and we still think the possibility for a strong rally is high. The futures were down on Sunday evening and they are down again this evening as swine flu is giving traders a reason to be cautious.
What ever selloff occurs in the next few days, it will be another, in a long line of buying opportunities. The swine flu victims (stocks that have sold off due to the scare, that is) may be good buys, if you are looking to add to your stocks. We bought some more natural gas in the past few trading sessions as that commodity continues to put in new multi-year lows. This has been our worst performer since we started buying it back in January as we started buying just a bit early it seems.
Our advice at the moment is to relax. We have had an intense market over the past six months with all manner of selling going on. We were taking that opportunity to buy and this takes some time and effort. Now that we are fully invested or nearly so, the effort level has settled down and we are now getting our sights trained on the selling opportunity that is coming.
As we have mentioned on several occasions, we will know when the selling opportunity hits because we will start hearing the media talk about the new bull market or your neighbor is telling you what a great stock he bought last week or last month that you should consider buying.
Our other clue will be when the volatilitiy indexes settle down a lot from here. They remain stubbornly high so any market sentiment indicators that tell us that people are mostly bullish need to be measured against these indexes. Right now the VXO is still near 40 and relaxation is the order of the day.
Stocks go down and stocks go up. Right now they are trending up and will have bull scaring moments along the way. We are going to relax and pay strict attention to the items above. In that regard, we may be trimming back our posts to reflect the lower intensity of the market. We are doing some trading but we don't think it's appropriate to discuss those trades in this blog. We are only trading in our small trading account. The main portfolios have not been touched for months and we plan to keep it that way until such time as the market tells us to sell.