No One Has Learned This Lesson
Nothing monolithic to
talk about today. The internals remain in fine shape. Most stocks
continue to have good charts. I would guess that 7-8 out of 10 stocks fit that
bill. Continue to buy the breakouts as they continue to work well. BUT — yes
there is a “but” — shorter-term, the “market ” feels a bit heavy.
The market is starting to do the “sell the news”
dance. First, the blowout GDP report and second, the unemployment report…and
the market has made no progress since. Maybe there will be a delayed
reaction…maybe not.
SEMICONDUCTORS are
extended. With the
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the way down at 465, there is plenty of room for a pullback.
Big-cap FINANCIALS
are acting toppy.
As I have said before,
BIOTECHS remain toppy and AMGN is downright toast.
But once again, don’t let the short-term action
sway you from buying the many breakouts that continue to occur in small-mid
cap land.
I did want to talk about some of my recent
experiences:
I spoke at a Financial Money Show in Phoenix this
past weekend. As you know, I am a big believer in sentiment. Let me be blunt.
LONGER-TERM, I AM WORRIED. Last year, all I was
being asked about was what stock should be shorted. Of course, that was after
an 80% drop in the Nasdaq. This time…should I buy
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…you get the hint. After the big moves these stocks have had, NOW people
want to know if they should be bought and in fact, were just bought by many.
In other words, no one has learned a lesson
about having a strict discipline. It was all about buying what was hot…after
the move. If an 80% drop in the major index that everyone was neck-deep in did
not teach a lesson of discipline, than I believe there will eventually be more
pain. Of course, we will continue to play the long side until the market does
indeed top.
I also met elderly people who are buying the
high-flyers AFTER the move.
I also met a gentleman that admitted to using
credit cards to invest in the market. He laughed about it.
I also met a person that told me in this market
you don’t need discipline…just buy.
And lastly, I was told by an elderly gentleman —
probably in his 70s — that a sell discipline of less than 10% was nuts.
I could go on but I think my point is well taken.
If you are one of those that still do not have a discipline and think this
rally will never end, I beg you to get out of this game until you have one.
Gary Kaltbaum