Persistency

It’s amazing how the market continues to battle back from a low opening and finish higher.  Given that, we’re in a range for the last few days between 970 & 980 on the S&P 500.  The bears would say we’re having trouble getting through 980.  The bulls would say it just won’t go down and it’s only a matter of time before we go to new highs.  I have to lean on the side of the bulls in the sense that the longer the sell off that should happen doesn’t, we’ll probably move higher.

The way to play this market right now is to continue averaging into various positions and don’t buy the full amount that you want to ultimately have.  Using time stops is the strategy that I’m going with.  Here’s the way it works.  You have cash on the sidelines you’d like to get invested.  You can either wait for a pullback which is still very likely and invest a lot at that time or average in as time moves along.  I would recommend both.  Continue to average in positions the look like they will move higher over time.  In addition, I will become a more aggressive buyer on pullbacks in securities that appear to just be falling because of profit taking.

The areas I’m focusing on right now are still technology, emerging markets, & commodities.  I think this is a fundamental story and technically they aren’t bad either.  Now, with all of this said, we’re still overbought.  That hasn’t changed.  All of the various indicators I watch are at the top end which leads me to believe a pullback is coming.  But, just like the selling was persistent in the fall, the opposite is true right now.  Any fall in share prices is being met with new money.

I know a lot of pros that are simply waiting for a pullback.  So, you’re not seeing aggressive selling.  You’re just seeing a pause in the buying.  But, if we continue to move higher, the pressure to get invested will spread and the volume will pick up.

Sorry for the short report but I’m off to the airport.  Look for me on Fox Business tomorrow morning at 8:10 & 8:30 a.m. CST.

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4 Responses to “Persistency”


  1. 1 Pierre July 28, 2009 at 8:19 pm

    Karl,

    On your radio show today you mentioned Indonesia (IF), aluminum (JJU), copper (JJC). I looked at IF, JJU, and JJC and found that they are very thinly traded. Are there better alternatives? If not, would you have a suggestion on how to set entry and exit points for these without getting hurt by the spread?

    Thanks!
    Pierre

    • 2 keggerss July 28, 2009 at 8:46 pm

      Pierre,

      Very good question. Here’s the deal. On IF, it’s a closed end fund, so volume is a big issue. However, I was able to fill several thousand shares in one day so for an individual investor it’s fine.

      As far as the other two, they are exchange traded notes and the volume is low but if you notice, there are times when big blocks of volume go in and the price doesn’t move. I trade in these all the time with several thousand shares. They have the ability to find dark pools and fill orders that you wouldn’t necessarily see. Again, for an individual investor, I wouldn’t worry about the volume.

      I trade money for several individuals and corporations and have no problems using any of the above. Good question.

      • 3 Raja July 29, 2009 at 8:23 am

        Can we not use IDX MARKET VECTORS INDONESIA for Indonesian ETF. What is the need to use a closed end fund ?

      • 4 keggerss July 29, 2009 at 8:25 am

        Sure. That’s fine to use the ETF. In fact, own some of each. They have different holdings. I have no problem with that. Some people use closed end funds because they trade at a discount/premium to their NAV and some like to buy them when they are below their NAV. But, I’m fine with either.


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