STRATEGIZE APPROPRIATELY: THE NEXT LEG UP COULD BE MAGICAL
Now that I have downtime while awaiting the arrival of relatives so that I may share in their grievances regarding all aspects of existence, I have had an opportunity to take a look at what could transpire in the week ahead.
The very first thing that came to my mind while shuffling through the forty odd charts I browse several times per day was the fact that the market could indeed be setting up for another period of steady grinding action to the upside. The rally, thus far, has taken on the shape of something that we are familiar with in 2012. That is an environment that is devoid of all volatility and only cares to move in one direction that starts with a U and ends with a P.
Should we be in the midst of the beginning of a third leg to the upside off of the 2011 lows, you should bear in mind that third legs have a tendency to become a great deal more unstable while in the meat of the trend. They also have a tendency to be where the bulk of gains are made before a more significant pullback is observed.
For that reason, you do not want to be NIT over the next few months. A NIT is a poker term defined by Urban Dictionary as:
1. Someone who's so afraid to lose a bet that they have to be coddled and convinced for an hour that they're going to have a great time and probably win, too. Eventually they may play, but by the time they get on the table the stakes are so low the table-time will eat any winnings you make.
2. someone who won't play unless they have a guaranteed sure win.
3. someone who'll squeeze a dollar 'til george's eyes pop out of the paper.
In the stock market, a NIT can be defined as a person who hops on a trend when it is in the process of maturing and the news flow is the most positive. Also, an individual who places their stops far too close. This forces the person out of a position prematurely and doesn't allow them to participate in the greater trend.
For purposes of this posting, the second item is of greatest concern. This next leg will be a point in time where stops should have a very liberal cushion in order to prevent sudden volatility from getting you out of profitable positions.
You will feel like an Albanian gimp if you miss out on another 20 percent in upside over the next few months because you bought into the news of an economic collapse in Europe being imminent due to your faith and trust in various analysts who couldn't trade their way out of a bullet-ridden tin can. The voice of the market should be the soothsayer of choice for all investors. That is if they plan on profiting consistently.
Sounding like a broken record has become a recent hobby. As such, I will reiterate that I continue to hold onto a 25% cash position that I can't imagine will have to be discussed past Wednesday of next week. Unless the market begins the week red and ends red, I will be putting my cash to work, adding to either GSIG, SYNC, YELP, ATNY or a combination of all four.
