After pulling in a 13% gain to start August, putting us up close to 90% year to date (gross return), there was little harm in moving to a 100% cash position on Friday after watching with some sense of trepidation as the markets started wobbling.
Leadership in the markets is a funny thing. Investors love to talk about how impressive leadership is while it's on its best behavior. However, once that same leadership begins to fumble the ball repeatedly, those same investors will turn their attention to the next comfortably sized bullish thesis, in an effort to soothe themselves out of worry.
There are, however, very real concerns when the five star generals of the market begin violently vomiting up recent gains, while investors seem less than concerned.
In this instance specifically, FANG names and especially software companies are putting together some terminal looking price patterns that, at best, tell of an unpredictable period ahead.
It used to be in the early days of this bull that situations and scenarios had a 7 in 10 chance (often times much better) of success. However, recently it has become a coin flip. There isn't a real edge remaining in the market as of right now.
Since we don't do coin flips, it's best to step away for the time being until clarity is achieved that will allow for another 7 in 10 or better opportunity to present itself for investment.
Let's see how this evolves in the days ahead. There's no harm in sitting out for a few plays.
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