2010Jun10 Portfolio Update

Since the Flash Crash on May 6th, we have witnessed up days in the market interspersed with down days. Isn't that what normally happens?

Yes, but this time is different. The up days are not trending to higher levels. The down days are trending to lower levels. This is not like the market of the 80s, 90s or the middle of the 2000s. We are watching for the environment to change. However, the chart below illustrates current trends of sectors in the market.


The "Os" indicate prices for the sectors are in a negative trend.

The number represents the percent of stocks in the sector on the NYSE that are in bullish trends. Everything is 50% or less. The lower the numbers become, the less risk there will be for us.
 
Sector chart


This is recalculated every night by DorseyWright.com. We do not want to reinvest until we can see positive reversals.

"Buying and holding" in this environment is like getting on a southbound train when your intention is to go north.

Football franchises own two teams - an offensive and a defensive team. When possession of the ball changes, the game plan changes.

In managing your account, "The Plan" is that "The Plan Changes."

Sellers are in control. It is clearly evident at the end of the trading day when the high frequency traders unload their portfolios acquired in the morning. Without a large number of buyers investing for the long term, we are just seeing day traders in action.

The economy cycles as well as its components. Patience is rewarded by waiting for the trend to change. When the train starts north again, we will get aboard. "The Plan" will change.