[youtube:http://www.youtube.com/watch?v=hqhoEyvddyA 450 300]r
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It’s gonna take time
A whole lot of precious time
It’s gonna take patience and time…
To do it right…
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MARKET WRAP UP 09/08/10
On Monday evening, I argued that the market was ripe for a correction after screaming higher the previous week, from 1039 to 1105 on the S&P 500. As I discussed, the key issue would be whether we would see either a correction in price, or a consolidation over a period of time. After the past two trading sessions, we have essentially corrected in time much more than in price, with the S&P closing today up 0.64% to 1098. In front of the Jewish holidays this week, volume remained anemic. As you would expect during a mild correction, breadth was decent, with pockets of strength amidst glaring weakness.
Unless we are looking at a March or July of 2009 scenario, where we sprint higher in parabolic fashion for the next several weeks, I believe it is best to remain as agnostic as one can in this scenario. If you were bullish when we were at 1040 last week, then now would be an excellent time to lock in some profits and wait for higher probability entry points. Similarly, if you are looking to go all-in short, it is best to wait for more follow through to the downside before becoming aggressive.
My analysis of the leading indices and sectors, seen below, leads me to conclude that more time is needed to digest last week’s move. Accordingly, I increased my cash position today, and will rely on patience to minimize the vast array of mistakes that so often plague market players during a trading range.
George Harrison was right, it is going to take time.
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