RANDOM THOUGHTS OF A PROLIFIC NATURE
- Considering emotion vs. process and execution. There are so many way to muddle up an otherwise simple equation to success not just in the markets but in life. Emotions will always be a part of our makeup. What we can do as progressive individuals is identify and isolate emotions for what they are. This will help in not allowing emotions to interfere with process and execution. In fact, it is imperative to process and execution that emotion remain as isolated as possible.
Think about the times when process and execution take a backseat to emotion. The excuse always starts with "I don't feel like," which immediately tells you that emotions are hindering the process and execution that you know will create your success. This goes for anything you are motivated to do with a positive, beneficial outcome in mind. Outcomes that bear tremendous fruit never come without the sacrifice of isolating emotion while religiously following the creed of process and execution.
Generally, individuals are never able to overcome emotions in order to allow process and execution to thrive. The very nature of process is repetitive, robotic and emotionless. The antithesis of human nature, which is filled with countless emotional dynamics. The ability to execute consistently also requires the ability to put aside emotional dynamics that are at the very essence of our being.
- The pessimism that had come into the markets as demonstrated by the put/call study I posted last week is in the process of being relieved. Given the technical structure of the market at the end of last week, along with the quick return of pessimism, this current rally should not have come as a surprise to anyone.
- There is a great deal of risk in the markets during May. The old adage "sell in May and go away," may prove true in 2013. I will be outlining this in greater detail over the next week or two.
- The fact that the current rally is led by Consumer Staples, Utilities, Industrials and Healthcare smells of a rally that has global institutional asset allocation to the United States written all over it. When foreign institutions are in the initial phases of comfort with a particular investment theme, they appreciate familiarity, history and stability. The aforementioned sectors offer those attributes. This attitude of US assets being the least of all investment evils worldwide should continue to be recurring theme for the long-term. As comfort levels increase so will exposure to more aggressive names in technology, biotech etc.
- The SOX is far and away the most bearish looking of all the indices I track. It is demonstrating expanding volatility in the face of a key trajectory point that was hit on the dot in March. This index will start playing a bigger role in the underperformance of the Nasdaq going forward. Again, May is a key month for maintaining proper levels of risk.
- Any bearish trend that develops through the summer should be seen as a buying opportunity eventually. The manner in which bearish sentiment swells back into this market at the first sign of trouble is not something that is going to disappear soon. It will keep the bulls in control of this market for a majority of 2013.
