[Right now: keep your eye on individual stocks!]
Everyone is concerned about the effect of the election mess on the markets, so I figured I would add my two cents.
The papers and the networks have been full of inconclusive opinions on Friday about whether the market had a tough week because of the country's current political problems or because...well, because it just had a tough week. The market is not a political debate, so its best to focus on the numbers. At my web site we have a portfolio of about 45 stocks, and we monitor the broader market as well.
First, until Thursday of this week, the NASDAQ had been managing daily closings within a relatively few points of the May 24 low of 3205. I have been looking at this as a good sign for quite a few weeks now. By Friday, however, the index had closed at about 3028. In terms of the general direction of the market, which certainly exerts a pull on even the strongest stock, this concerns me. Monday and Tuesday (11/13-11/14) can provide some sense, we think, of whether the market has come loose from its moorings. (The next test for the Nasdaq is at about 2870.) Whatever the market does, however, I'd be very careful about explaining it in terms of the direction of the political chatter. If you continue to explain movements in technical terms, you are on much stronger ground, IMO.
Even if the market were continuing to head south, I would not start liquidating my portfolio helter skelter. IMO, the best approach is to continue following the direction SET BY THE MARKET FOR INDIVIDUAL ISSUES. Mutual funds also help to maitain stability in your portfolio and keep you in the market while allowing you to sleep at night.
Note that, at the Web Site, we stopped out of only two stocks last week, with one more stock having gone through its stop and recommended for sale tomorrow. On the other hand, at least three stocks were pretty strong performers this week (ADMS, SCSC, DFXI), while quite a few were steady performers (for example, EXAC, MINI, HC, and PTIX). On the Stopped Out List, at least one stock —ISLE—was looking more bullish this week, while PRLX continues to consolidate and show us a good chart. The point is that this is not looking like a meltdown to me, at least not yet. Friday, of course, was the worst day of the week, which is why I am looking with great care at Monday and Tuesday's market.
Looking at our Stock of the Week portfolio (that is, active stocks not stopped out and awaiting reentry signals or stocks waiting for their first entries) as a whole, the portfolio had a value at the close on 11/3 of $23,359. At the close on Friday, 11/10, the portfolio had a value of $22,748.32, for a decline of $611, or about 2.61%. In comparison with the NASDAQ's fall of 12.24% for the week and the S&P 500's decline of 4.25%, this was a very good performance. This is partly attributable to the fact that we have, in fact, been raising cash over the last few week's from the sale of weak performers, but in an orderly fashion based on signals from the market about the direction of those individual stocks. I think its particularly important that investors stick with this general approach and continue to avoid panic selling.
Is that stating the obvious? Maybe. But sometimes it reassures folks to know that the regular rules still apply, IMO.
We update our Tracking Tables weekly. To check the Tables through the close on November 10, use the following link:
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Irv Mermelstein
www.profitsovertime.com |
