Some of you... and you do know who you are... are so convinced that this market is on the verge of a collapse that you're still sitting on the sidelines. But, here is the good news... just like a stopped clock, you will be right one of these days and that could be soon... or not.
This current market is a perfect example why I refuse to guess when the market is going to boom higher or fall off of a cliff. Guessing is so totally tiresome. Take all the economic pundits (aka, guessers)... Not a single one of them predicted a gain in the employment numbers released last Friday; much less a 2 million plus number. What good is guessing if guessing wrong costs you money. A LOT of investors who were betting on the 'fact' that the wheels would fall off this market when the employment numbers were due to come out, lost big time.
Wouldn't it just be a whole lot simpler if you just waited to see how the market was going to react to the employment report and then invest accordingly. You DO NOT have to guess what the market is going to do, to make money in the stock market. Now, of course, all those high-paid analysts who make massive 6-figure salaries want you to believe that if you don't listen to their sage forecasts, you will be doomed to the dustbin of stock market investor failures. But, I am here to tell you that you do not need to read a single market forecast or an analyst's forecast of any company to make serious money in the stock market. Why would anyone want to base their financial success in the stock market on a bunch of guessers is beyond me.
Here is why I make the above statements, that for most investors, is heresy. You have been taught that if you "do your research"... "do your homework"... really "know the company behind the stock"... "read the analyst's reports... that you can invest "more wisely" and you will make far better investment decisions.
Well... I suppose, if you have nothing better to do, trying to act like you know more about a stock than the market does is okay. I mean, if that makes you feel smarter than your golfing buddies, there's nothing wrong with that.
The problem is, "the market" has already done all of that work for you. All you have to do is let the market tell you which stocks are the winners and which ones are the losers. Quit trying to find an "undiscovered stock"... they don't exist. You can't do enough research to find one. Better, is to simply look at the trends of the market and individual stocks. If you understand how to interpret trends in both the market and in individual equities, and if you know that the current trend will last until it doesn't, you can do quite well in your investing.
Don't get me wrong... Trend analysis, momentum analysis, rules for each condition of the market and the discipline to follow those rules regardless of what else is going on around you is not easy. But, it is far, far better than listening to a bunch of high-paid guessers tell you what you should be doing and realizing they are wrong more times than they are right.
I'll tell you exactly where the market is:
At this writing, the market is about 5% below where it is 'likely' to become overbought. There are specific things you should do when the market gets overbought and this blog is too short to get into those items, but I will share some of them with you over time.
The market is about 80% bullish, 15% neutral, and 5% bearish, based on the trends of all 11 sectors and my Total Market Index. This means I am buying this week.
Lastly, regardless of what anyone tells you, always assume every trade you put on is just dead wrong! That's why you need a volatility-based stop loss for every position.
One more lastly... Today was a huge day for our models. We had one of the biggest moves up in our Aggressive Growth model this year. One of our trades netted a smooth-rolling 39.16% just today. Overall, the model gained a solid 4%+. Our other models were up today, but AG knocked it out of the park. This market is on a bullish trend and we will do our best to follow it until it HAS changed trend. The guessers out there can guess WHEN it WILL change and they might be right, but if you wait until the market HAS (past tense) changed, you'll know for sure and then you'll get off the bull bandwagon and on the bear trend and ride it until it bottoms.
Well, I'm humbled by Uncle Sugar. I totally underestimated Uncle Sugar and only expected them to just stabilize the market with a solid floor. Which they did for a while. But then, they stomped the sugar and blew the doors right off.
Uncle Sugar re-established market confidence and The Market rose to the occasion. The Bull Junkies did and are hopping right back on. However, as Mike noted above, I can't ignore the technical side. The Market is back, but the economy is very much and most definitely not.
I know that The Market would fall flat on its face right now if Uncle Sugar pulled-out. In fact, I expect Uncle Sugar inflated everything to set itself up for huge…