Don’t chase this market, here’s why
Currently, the Dow, the S&P 500, and
the Nasdaq are all at multi-month highs. I agree that this is bullish
from a longer term perspective, but from a shorter term perspective, the odds
are against us. Whenever I see the markets continue to make higher highs one day
after another, I wish that I was more “in.†And, each day that the markets
continue to creep higher, that feeling that “I’m missing it,†swells. Suppress
that feeling.
I trade off of historical statistics. I base my decisions off
of data. The market is currently at a 1 month high (actually more like 6 month
highs). The average one week return after the S&P 500 makes a 1 month high is
0.01%. The average 1 week return of the S&P 500 overall is 0.21%. That means
that when the market is not at 1 month highs, it’s average return (over roughly
the past 15 years) is 0.21%; therefore by buying now–I am at a 0.20% (0.21-
0.01) disadvantage. For the Nasdaq that disadvantage is 0.17%.
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