Market Wrap – week ending 3/14/2014
We find ourselves again in a declining market with the Dow, NYSE and S&P500 all in negative territory for the year (again) and IWM and QQQ (small caps and technology focused ETFs) not far above the breakeven point.
For our ‘the One’ strategy, we started the week at 100% (no margin use) and lowered our exposure mid week to 75% invested. The market is starting to look weak again, although I think we are very close to another bounce up from here. We have dropped a bit too much in the past week to not get some rally attempt.
Our longer term strategies are still both fully invested and are waiting for more signs of weakness in order to warrant an exit. With a bounce (up) overdue, I would assume we will not get to this exit point in the coming week.
The market is definitely looking a bit more shaky than it did over the previous three weeks. Down days having significantly higher volume than up days, and the down days have larger price movement ~ fear is creeping in. More importantly, I am starting to see many individual stocks breaking apart, particularly the previous leaders. As I have mentioned in the past, leaders ‘lead’, so if they are falling apart … it isn’t too much of a stretch that that rest of the market will follow.
Volatility remains inflated which drives the fear card, mostly driven by news events including China’s production numbers and the Ukraine situation. And as I mentioned last week, market sentiment is still overly bullish, which as ‘secondary indicator’ is not reliable enough to use as a trading signal, but should serve as a warning sign of a potential problem down the road.
I expect to have a resolution in the coming week, whether we reverse and move back to new highs OR continue the downward slide … as we are close to the level where a bounce should occur, and if it doesn’t then I expect to see further downside quickly. Of course, whichever way the market direction goes, we will focused on protecting your investments.
Hope you have a wonderful and safe weekend.
Respectfully,
Randall Mauro
Resnn Investments, LLC