Popcorn logic

Advisory Services, Growth Performance, Capital Preservation Strategy, Berkeley California
There are some intriguing (tempting) negative divergences in the market recently – enough to warrant caution, cool some jets and for self-preserving investors to more or less position defensively.

Not for you, I know, as the market just made new highs, interest rates will be heading higher (a positive at this stage for the equity universe) and some Russ-or-Wellian indicator older than even me has confirmed that both transports and industrials are signaling green lights going forward.

Being old, but not that old, has its advantages. I came into this sport not long after the ‘87 crash. I had a good mentor, Cedd Moses, who would lead the aggressive growth managers category for a fair share of the 90’s (and a guy who had been short during the crash, via OEX options).

Anyhow, to make a point, one of the first lessons I learned is that the Dow theory is something you fade (scoff at actually); especially if it is merely the Dow and/or SP500 that makes a higher-high, while the Nasdaq, NDX and/or small caps roll over at a lower high.

Keep an eye on that.

Further, when the public can tell the economy is finally improving, growth stocks are usually finished, at least in the intermediate term.

Anyhow, as some of you will point out, old rules don’t apply to this market – traditional technicals and fundamentals should be thrown out the window.

You’re probably right and so perhaps it’s good I’ve changed. I’m sitting here, in my own stew just now, acting merely defensive instead of moving to 100% short. I don’t think the long term is so bad (anymore) and I’m more excited about buying new leadership on the heels of a correction than I am in profiting optimally from any downside.

For now at least, I’m just biding my time for something better. You can’t get much older than that. White wash is so bearish.