Jon, this is one of the guys i read every day.
Tops Are Processes
Rev Shark
4/23/03 02:29 PM EDT
A lot of folks are becoming increasingly cautious about this market. We have had some big moves, and it makes sense to take some profits, but I think it's a mistake to anticipate a "V"-type top. There is an old saying that tops are processes and bottoms are points. The likelihood, barring major news of some sort, is that the market will form a top slowly and a rollover will be fairly gradual.
When we have had a strong upward move, there is a tendency for dip buys to prop us up a few times before they tire out. Only after the second or third dip do they begin to falter, and traders question whether they really do need to rush to load up.
The Beige Book retail data show that consumer spending was weak due to the war, poor weather and a late Easter holiday, but I don't think anyone is really surprised by a report that characterizes the economy over the past month or so as "lackluster."
I'm staying with long positions for now but have taken some profits. New positions are becoming more difficult to find now since there are so many extended charts, which means that my cash position is beginning to build back up.
Breadth is still positive, and there are opportunities in small-caps, but things are slow. A day or two of pullbacks or basing would set up the upside nicely once again. |
