Patience

The last time I saw a market very similar to this was the fall of 2002.  I’ve mentioned this for a few weeks now.  We were in a recession, the market had “double bottomed”, and was on its way up with a ton of confidence by investors.  Then, it fell almost back to its old lows when the fear spiked and we finally got that ultimate bottom that started a new bull market.

But, I was looking back today again at that time frame and noticed the S&P 500 went from 800 to 950 before it went down.  That’s a huge gain for an index.  So, it’s not unusual what the market’s doing.  If you’re cautious like I am, it’s a little frustrating at times.  But, remember that we’re watching this in slow motion.  You and I watch this stuff every day (me, every minute).  So, if something doesn’t happen in the first 2 days, it feels like an eternity.  But, just when you’re feeling like the train is leaving the station and you abandon your strategy to chase stocks that are already up, that’s usually when it’s about to turn.

So, I don’t know when the exact moment is, but nothing has changed my mind as to the danger that remains in this market.  Continue to look at the strong groups and feel free to participate and trade.  Just don’t let your guard down and don’t abandon short positions yet.  Some of those strong groups continue to be container companies, bulk shippers, solar, technology, energy trusts, etc. 

By the way, I think oil has topped for this go around.  If you have a way to short it, you can do so with a stop in place in case this strong bull market for oil resumes.  But, for a trade, I think it’s worth a short.  You can accomplish this through buying puts on USO or doing something more sophisticated if you trade commodity futures.

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