Don’t Get Confused

Every day the market gives us something different and it makes us feel different.  From frustration and fear to greed and confidence.  Ignore your emotions and rather focus on other investors and their emotions.  It’s a much easier trade to do that.  Focus on monitoring when the fear really spikes or confidence really spikes.  Those are extremes where we can really make some money or protect ourselves from losing a lot.

The path of least resistance is still down.  Let’s not kid ourselves.  This is still a sell the rally environment.  We will bottom at some point and it may be soon.  But, we need to let the market prove that to us before we really commit hard earned money.  I’m slightly long right now so I’m enjoying up days but I’ve re-established some shorts in recent days as I don’t trust any rally right now.  They are all on low volume and there’s just not enough real demand to cause me to make major adjustments.

I will still be buying good companies and sectors like tech when I see the opportunity.  But, overall, your strategy has to be to buy the fear and sell the greed.  Right now, we don’t really have either.  I’d say we’re leaning on the side of greed believe it or not.  My Crazy Investor Indicator which measures pessimism and confidence by investors is showing as much confidence now than we’ve seen since mid February right before we had a big decline.

So, let’s not get too confident in these rallies as they all been selling opportunities.  But, stay fairly neutral right now because we have many cross currents.  But, based on my work, I think selling the rallies will still be the most profitable move over the next few weeks. 

Commodities

The sell off I wrote about last week continues in commodities.  I’m seeing losses from 1-6% across the board.  Gold especially stands out back under $900.  I still have a target of $830 an ounce.

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