In markets like these, we always learn alot. There are always new variables and events that have never happened before. So, what we have to do is continue to learn and get better at investing and trading. One thing (among others) I’ve learned in this market is to sell news related rallies. We’re oversold and should get a rally at some point, but looking back every rally we’ve had because of some news event was a good selling opportunity.
I’m using the news of Tim Geithner becoming the next Treasury Secretary as a selling opportunity. I’m not going to over do it but I will continue to sell into rallies as the internals continue to deteriorate. Don’t get me wrong, I think it’s huge who Obama is naming in his cabinet. Remember that a bigger driver of equity prices in the short run is emotion. When investors are fearful, they sell. When they aren’t confident, they sell. Investors haven’t been very confident lately partially because it looks like nobody is driving the bus. The parents aren’t home. So, for investors to embrace the pick of Geithner is a positive. No doubt about it. But, I know that what matters is demand for stocks and fundamentals. And neither one is very good right now.
So, enjoy the rallies as they are normal and part of every bear market. But, don’t get used to them and don’t take anything for granted.
