Kevin, a couple of thoughts for you on your comments
I do agree with you that the market has risk on the downside---and I have said so on this and other threads. I was 100% long in December and posted on dppl's thread, that I was selling into strength during the third week in January and by the middle of February, I was 100% in cash. At this point from a trading stand-point, I will play this market only on the short side because I just don't go against the trend when trading. However from an investment stand-point, I make decisions to allocate funds looking at it very long term--and I have found that buying quality stocks, even in an environment of declining prices, will pay off, in spades, in the long run. The key thing is stock selection and phasing into such stocks gradually.
As far as the McClellan Oscillator is concerned, one of the things to keep in mind is that over-sold conditions like over-bought conditions can stay with us for a long time when one has a market that is trending strongly in a particular direction. As far as the analogy to the 1987 situation, I don't agree that the situation today is analogous. I was active in the markets then and the interest rate environment was far more unfavorable and there was a lot more frothiness than there is today. So I doubt that we are in a 1987 environment right now--but who knows.
I would really like to see more pessimism as reflected in the usual sentiment indicators--that is begining to happen but we are not there yet, IMO.
Good luck with your trades. |
