I also speak to several technicians and portfolio managers, discussing what they are culling.
Here’s an excerpt:
Despite the negative economic future, with all these positives and the indices near new highs, why have any concerns beyond the near term?
The answer lies between the long and short term. Over the intermediate term, there are numerous technical warning signs. I use these signals to help alert me to a possible change in trend or character of the markets. Investors ignore these signals at their own peril.
That all said, investors want to participate in this current action, especially since they know that the last leg up in a bull market is often the most profitable. Recall that from October 1999 to March 2000, the Nasdaq doubled. But there is good reason to be concerned too.
Short-term bullish, longer-term bearish, intermediate-term confused. What’s an investor to do?
Cull the herd.
The most amusing thing about this is the reaction it generates. The Bulls are convinced I’ve joined them, the perma bears think I’m a sellout. Anyone who’s been reading me long enough knows this is the same old sameold I’ve been yakking about for a year. I just keep edging the top date forward until I get the red market signal that its time to short.
Enjoy the Rally but Cull the Herd
3/3/2006 3:08 PM EST