Don’t Mistake Activity for Accomplishment

Coupled with slowing upside momentum in key individual issues and sectors, the broad market has essentially gone nowhere since mid-to-late March. With that backdrop, I have been inclined to raise cash recently, opting for a less aggressive approach. Into a long, three-day weekend, I am even less interested in taking on risk in either direction. What strikes me most about this market is that I am essentially risking dollars for perhaps a few pennies at this point, given the nature of the price action recently. That can change in short order, but for now I am in wait-and-see mode.

The best suggestion I have here is to not mistake activity for accomplishment, via trying to overtrade this tape or forcing the action with sizable directional bets. While it is easy to castigate me for basically saying “the market could go up, or it could go down,” the reality is that the time to be heavily long was during the first ten weeks of this year, blocking out the noise that accompanied a classic wall of worry. Going forward, I am observing the market for signs of rotation into small caps, financials, and materials. However, I am going to respect the possibility of a steeper price correction.

Above all else, though, I am watching a close and hold above 1420 on the upside for the S&P 500 index as a breakout sign, while I expect a move below 1392 to bring in even more sellers for a quick move down to the upper-1370’s, at least.

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