Market Wrap – week ending 3/07/2014

Another productive week for the market.  As you see above, we exited margin and went back to just 100% invested.  For those of you that have do not have margin accounts, there was no change in your allocation; you were fully invested at the start of the week and you are fully invested at the end. 

As you have heard me say before, margin use should only be used in opportune times when the market indicators are all aligning nicely.  Since being on margin increases the risk on your account substantially, we only want to use it sparingly.  So … with the increased volatility that we have seen this week mostly as a result of the Ukraine situation, I feel it is best to remain off margin for the near term.  We are still fully invested (100%), and I still feel the market is acting very healthy, just took some of the risk off the table.  Protecting your account from decline will always be our number one goal, paramount to generating profit.

Looking at the previous week, the market had a huge decline on Monday from the Ukraine uncertainty then bounced back on Tuesday completely erasing all the previous days’ losses.  Our analysis did not show dramatic selling pressure on Monday and so we did not feel any change was necessary in our accounts.  As the week has progressed we have seen an increase in selling although nothing that causes too much concern at this point.

The market continues to act fairly well with the only concern cropping up being that investors are starting to get complacent again.  Although we do not use market sentiment in our analysis, it is just something to note that when there is too much bullish conviction in the market it can lead to a pullback.  Market sentiment is a ‘secondary indicator’ which basically means that it isn’t reliable enough to use as a trading signal, but that it a warning sign of a potential problem down the road.

Hope you have a wonderful and safe weekend.

Respectfully,

Randall Mauro

Resnn Investments, LLC