Sunday, June 15, 2014

Don't go away in May!

Decent earnings growth with 70%plus of companies beating the earnings forecasts; decent macro-economic news; and the big reveal of my stop-loss sheet show that the bull market is in full swing.  The market may be somewhat expensive but boy, don’t stand in the way off a running train! 
We are obviously in entering the ninth inning of this bull market, the problem is we don’t know how long it lasts. When I updated my stop loss spreadsheet from just a couple of weeks ago it showed an amazing number of new highs.  This bull has definitely momentum.  Yes, you don’t want to be the guy or gal who misses the last musical chair but neither should we be afraid and sell your shares because we’re finally making good profits. We want to let our winners run in this stage of the stock market using our stop-loss sheet as an emergency break. 
Here is a portion from my stop loss sheet.  I got stopped out of Silver Wheaton some time ago and now I am eying the stock to go back-in. The unrest in the Middle East has temporarily pushed the stock back up from its low, but I don’t feel comfortable to dive back in. Remember from my last post, I think that automation has replaced the deflationary force of China’s cheap labor that kept inflation in check during the 1990s and early 2000s. Now it is automation that keeps inflation down and causes GDP to be too pessimistic.  I evaluate again purchasing it when it trades around $21 per share.
Click the figure to magnify
In the meantime my portfolio counts 58% of its holdings have new highs over the last number of weeks; a very broad portion of the markets that is in record territory.  On average my stocks trade 0.57% below their previous high while the median stock is 0.71% higher in the tops of the previous update.  In earlier posts we expected a sleepy market over the summer prior to a barn burner fall.  Well, the summer is a lot less sleepy than I anticipated; hold on to your hats for the rest of the year.  In the meantime, the Oil and Gas sector has been on a tear in spite a significant number of staff reductions (lay-offs); remember the canary in the coal mine?  We’re definitely in the ninth inning and thus let your profits run, but keep your finger on the sell button especially when prices go crazy!

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