Be A Lover, Not A Fighter

Random Thoughts

I try not to read too much into a flat day. Sometimes a market just needs to pause. I do see it as glass half full when a market can stay at or near new highs.

Like I said yesterday, don’t argue with new highs. If a market is going higher, it will have to make new highs along the way. It’s that simple. Note that I didn’t say easy.

“Be A Lover, Not A Fighter” by Leo Melamed is one of my favorite quotes. What is, is. There might be wonderful, well thought reasoning as to why a market should not be making new highs but if it is, again, it is.

So, the indices closed flat. This action keeps the Ps (S&P) and Rusty (IWM) right at all-time highs and the Quack (Nasdaq) right at 14-year highs.

Internally, the market continues to do well. Most areas remain in major longer-term trends.  We are seeing some so called “rolling correction” action  here and there but the good news is that these areas have been able to recover to go on to hit new highs.

Commodity related areas such as Metals & Mining and the Energies still appear to be in the process of bottoming out—we are long USO, DNR, and SAND. Notice I used the word “process.” Sometimes with commodities it’s more of a process than an event.

And, again, I like the fact Banks have stabilized since they looked quite dubious not too long ago.

All isn’t rosy in the world though. With rates on the rise areas sensitive to that such as Real Estate and Utilities still look questionable. Based on their lower volatility and the overall market action, I don’t see any reason to rush out and short here. If you did want to play this, since the volatility is low here I think shorting Bonds would be just as good of proxy.

So what do we do? Well, at the risk of preaching, don’t fight it. I’m seeing a few shorts setting up but I see no reason to be a hero. Therefore, focus on the long side. And, in case I get hit by a beer truck—which statistically is not totally out of the question for me–continue to focus on the long side as long as the market remains at or near new highs. “Be a lover, not a fighter.”

Best of luck with your trading today!

Dave

P.S. Join me for Dave Landry’s The Week In Charts today because you just might learn something. Bring your questions and favorite stock picks.