Why I've Decided to Raise Some Cash for March
The action in stocks continues to confound me. We had upside breakouts from widely observed triangle formations in both the Dow and S&P (graph below), however, both have been repelled by their 50 dma's. Wait a minute, was it just retesting the breakout? Either way, the tepid volume shows a lack of conviction in both bulls and bears.
If the S&P manages to get above the previous high of 1396, there is another overhead resistance around 1406-1410 that it needs to contend with. For what it's worth, I'm on record as saying we'll retest the January lows before moving higher. The most recent price action puts us in wave 4 of a 5 wave down. Accordingly, I've been raising some cash in order to better take advantage of another bottom.
About a week ago, I sold some agrichemical names that have been performing well, perhaps a little too early. Names like PotashCorp of Saskatchewan Inc. (POT), and The Mosaic Company (MOS) have been on a tear, but as I recall, they were taken to the woodshed several days before the January low. If the market were to break, the strongest sectors would break last, but break they will.
I also closed out all positions in my PM trading account yesterday, while leaving the core positions intact. I stand by my prediction that we'll see phenomenal returns over the next two months, but the PM action, particular that of silver, looks toppy. While we can certainly go higher without pausing, I wouldn't bet on it. More than anything though, I want to preserve this month as one of my best, which barring a calamity today, is assured.
Related Articles
|
Top Rated Comment Streams:
-
1.Hedged In662
- 2.
-
3.Smarty_Pants412
-
4.axelrod608303
-
5.cos1000278
- Free E-Newsletters
- About Seeking Alpha
- About Us
- Contact Us
- What's New
- Readers Feedback
- Advertise With Us
- Contributors
- Contribute an Article
- Feature Your Book
- Our Contributors
- Anonymous Contributions
- Dispute an Article?
- Legal
- Terms of Use
- Privacy
- Copyright
This article has 3 comments:
-
nyka
-
156 Comments
Feb 29 10:48 PMtry...month one of my best which,COMMA, barring a calamity today,
-
SPXplus10
-
6 Comments
Feb 29 11:03 PM-
RampMan
-
8 Comments
Mar 06 06:59 PMI never understood the "testing(retestin... the limits" stuff, even with a math degree. Now more than ever, seems like sophisticated voodoo, as markets are punching holes in various barriers.
From my perspective it's simple. Earnings drive the price of stocks. Prices rise and fall based on investor perceptions of likely changes in earnings, sometimes based on fact, sometimes on emotions, but not because some silly triangle is facing north, left or elsewhere.
I'm guessing there will be all kinds of explanations as to how clear this chart was AFTER the market does whatever it does. But stock values continue to respond to demand, costs of goods, and the unique strategic advantages/disadvantag... a company has in its market. Toss in less predictable factors from left field... weather, elections, turmoil, legislation, and innovations.
Net? Interpolating statistics of aggregrate market activity only provides a hint of future performance, and only given similiar circumstances. We all still have to make decisions on which factors affect performance of individual stocks.