Flexibility

“Buy!”  “Sell!”  “Generational lows:  Great opportunity!”  “Wild inflation!”  “Bear market forever!”  Which one is it?  I’d say prepare for all of them. There are too many variables to make a prediction on what the world will look like in 10, 20, or 30 years.  This is why we trade.  This is why I believe in trading.  Emotions get the best of investors from time to time and take stock prices way too low.  Sometimes they take them way too high.  Shares of stock are never perfectly valued.  They fluctuate.  Remember the 1990s and how easy it was to make money.  Think back and you’ll remember how easy it was.  It’s never supposed to be that easy.  Investing takes work.  You need to study the investment, the investors, the political climate, the economy not only in the U.S. but around the world.  There are so many things to take into consideration.  But, there in lies the opportunities.  Many people don’t do the homework or dedicate the time like you do.  They just blindly throw their money into investments because it seems like the thing to do.  Or, they may do it because they saw someone on television say that’s the thing to do.  Those people are always there for you and me to take advantage of in those situations.  Greedy people need to be sold to and frightened people need to be bought from.

My goal with this blog is to combine the fundamentals with the technicals and let you in on what I see and what I think can move and make you money.  As I wrote last night, we don’t have rules on how long to hold things.  We can make mistakes and undo them very quickly.  We can take profits quickly as well.  Or, when the time is right, we can make an investment that we can keep for several years.  We’re at an important place right now because I believe the easy money has been made for this rally.  The massive oversold rally is now being tested.  For the first time since March 9th, the rally is in question.  Yes, many have questioned it but even the bulls are a little concerned.  You can see from the chart below that the S&P 500 now firmly has a double top in place that many technicians will look at as a potential problem.  

 


SP 500 5 15 09.001In addition, the 200-day moving average is there staring us in the face.  Add to that all the uptrends that were broken this week besides the price levels on the indices including the advance/decline line and the uptrend for net points gained.  Many people believe this technical stuff is just a bunch of malarky.  You know what though?  Lots of people look at the same charts you and I do.  It becomes a self fulfilling prophecy and that’s why it works. Trust me, the fundamentals didn’t work very well in 2008.  Those “value” guys are out of jobs right now.  We all got hurt last year with the meltdown but those that were diversified into high quality bonds, private equity, cash, and were more active on the trading side were the ones that are still around.  

Now that all these uptrends have been broken, what’s our next move?  Mine has been to raise more cash and wait.  I sold a lot this week including my holdings in Natural gas.  This rolling over almost seems too obvious.  Every indicator in the world I watch tells me that we’re going down much more.  But, because it’s so obvious, I have to respect the fact that this may be all there is to this sell off.  So, as I wrote last night, be flexible and be prepared for more gains.  I just don’t want to be the first one to make a move.

Television

I’ll be on Fox Business Monday morning at 7:40 CST.

Biz Radio

Just a reminder that my daily radio show, “Through A Trader’s Eyes with Karl Eggerss” will be moving to the 8 a.m. CST time slot starting Monday in Houston, Dallas, & San Antonio.  If you’re not in one of those cities, you can stream it live on http://www.bizradio.com or listen to the podcasts on the right of this page.

Have a nice weekend.

This post published at www.karleggerss.com

None of the content on this page can be reproduced without the permission from Karl Eggerss & www.karleggerss.com

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