No Man’s Land

The easiest time to make money in the markets is when it’s at an extreme.  It could be the overall market or a specific sector like gold or oil.  Right now, we’re in no man’s land.  We called for a rally based on the fact that too many people were bearish and everyone was tossing in the towel.  We got the rally.  Financials rallied 35% from their lows on average. 

But, that rally has stalled.  Now, you’re seeing the selling coming back into financials, commodities, utilities, consumer discretionary stocks, etc.  So, pretty much everything is selling off (see below).  Basically, health care is holding up.

So, is this the final capitulation.  I think not.  I believe this slowing economy and tough market may drag on for a little longer than the average investor wants.  Perhaps through the election.  You can still buy the extreme fear and sell the extreme optimism.  Unfortunately, we’re not at either right now.  In the last week, I’ve added some more shorts back on and have done more today.

It’s tough watching steel, drillers, agribusiness, and the rest of the “good stuff” sell off.  But, in a tough market, I’ve said it before, there’s no place to hide.  So, what my plan is to continue to add to these but stay short the general market. 

But, don’t get me wrong.  This is tough right now.  Nothing’s easy.  Cash is king (even if it’s paying virtually 0%)


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July 2008
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