The market is clearly getting a nice pop today and this is a day where a lot of people are unclenching a bit.
I am uneasy that this rally will keep going. I have said that if I am wrong and we have a big whoosh up that I would expect to lag given the cash raised over the last six weeks but for now most of the foreign I hold is up more that the domestic so I am reasonably keeping pace. As of twenty minutes ago, I was, generically speaking and clients accounts could be better or worse, ahead by about 18 beeps. Hopefully this foreign stock outperformance can continue as they were hit harder on the way down.
Regardless of what stocks do I think the dollar will get back on its down trend in short order which will continue to help foreign stocks.
I am not in a hurry to seriously redeploy the cash raised. I may add a food stock with a high dividend but that is the only type of stock for now. This move up seems like a textbook fakeout that will start eroding in a day or two. If I am wrong I'll ride it up with too much cash. As I think risk is higher than normal right now I am fully prepared to lag but hoping I don't.
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3 comments:
Of course you may be correct, but this could still be nothing more than a pull back.
can't argue.
the significance of the move down could prove to be nothing. wouldn't be the first time or the last time i get a call wrong.
as I think risk is greater i need to think about preserving capital even if it is the wrong tactic for now.
A weaker $ doesn’t necessarily mean that foreign stocks go up. Take Japan for example. The Nikkei is @ 15000 +/-. The high was 38000. If you take into account the exchange rate difference the result is: 38000/240 = 158.33, 15000/114 = 131.57.
This also means that at 18000 the Nikkei is close to its all time highs in $ terms. Resemble the Dow?
As for the downturn being over – well there is still some more upside before we get the second leg. Besides, today we should be opening down but I wouldn’t be at all surprised if we finished up due to options exp.
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This reply was written by a CrossProfit analyst. This is a personal view and may not reflect the views of CrossProfit.com.
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