Welcome to 2013! In my market direction outlook for 2013 I commented on the doom-sayers. There is however a difference between a doom-sayer and realist. This morning I had a good chuckle when CNBC’s Rick Santelli, who is well-known for his outspokenness, raged against the passing of the budget bill last night by Congress.
Once again as Rick pointed out, the administration did the “easy thing”. Pointing to the coming battle for the debt ceiling, Rick shouted that there “has to be an endgame to insanity”. His best comment came when he complained about “watching politicians all slap each other on the back while the country slips into a Grecian like formula.”
There is a lot of truth in Rick’s rants this morning and CNBC should be congratulated for allowing comments like his to be aired. While as an investor it would be idiotic to believe that markets are not manipulated and that I should fight the trend, it also would be idiotic to believe that this bull market can continue indefinitely with the Fed pumping in billions, tax rates staying artificially suppressed and little being done to control excess government waste which is probably far worse than trying to set deficit target restrictions on various departments. But I can be as cynical as I want but it won’t profit my portfolio to take that kind of attitude. At some point market direction will turn down and finally all the bears will be right. But they have looked for the next bear market pretty well since the pop back of stocks started in 2009. Last night I watch an interview with Bill Gross of Pimco fame, who while not admitting he was wrong, did indicate that obviously the market direction is going to “do whatever it wants to do” and not what “he thinks it should do”.
Market Direction And Staying Focused
There is a very old saying that the “trend is your friend”. Despite whatever we may believe should be happening, it is important to realize that fighting a trend such as buying puts when the trend is obviously up is a waste of capital.
The morning bounce may be exuberance a bit over the top but it is the overall market direction that is important. On Dec 11 when stocks gave a breakout signal and again on Dec 18 when that breakout was confirmed, the constant media hype and then jabbering on capital hill about the lack of progress on the fiscal cliff, finally broke the back of the breakout on Dec 28 when a sell signal was generated on the S&P 500. But that breakout signal was strong as was the confirmation and it will only take a day like Monday and again today to bring that breakout signal back into focus.
Market Direction And Moving On Up
Technically the market direction move higher on Monday and again the big jump today may indeed be overdone, but they have set the stage for another attempt to break the stock market highs from 2012. I am expected market direction to pullback after two big up days and yes the excitement among investors is indeed overdone for the moment, but it is the underlying trend that is important to stay focused on.
Market Direction and Treasuries
This morning Treasury Bonds and Notes moved lower as money continues to flow out of treasuries and into stocks. This will eventually propel stocks higher as more and more investors turn to stocks in the hopes of earning more than they can with the anemic Treasury Bonds and Notes rates being paid.
Stay Focused and Consistent – Don’t Chase Big Up Days
Stay focused and remain consistent with your strategies. Big up days are not worthy for Put Selling on stocks that jump big on days like today. My goal is Put Selling for income. That means when the market direction gaps up like today, I know to stay away and hold off on my Put Selling.
Market Direction Portfolio
This morning I was surprised to see Doug Harris change his market direction portfolio but he explained he will be posting some info on his decision so I’ll stay tuned for that.
Income Returns For 2012
My income returns for 2012 were terrific and show what investors can accomplish by staying focused on their strategies and turning down the noise in the market. With the returns of 2010, 2011 and now 2012 I have doubled my portfolio in 3 years. Yet each year has been filled with doom and gloom and everyday there are new websites jumping up with such negative outlooks that investors have to be questioning their sanity of staying invested.
The Market Direction Trend
Don’t question your sanity, but be aware that some day this bull market will end. When that happens I will be there will my cash at the ready and my bear market strategies to profit in the market direction bear.
So stay with the trend. Turn down all the media hype and consider that which you see in the market direction.
While I may agree that the government just does not seem to “get it”, I also know that it is foolhardy to get angry, and start trading in a manner I believe the market “should be heading” and not the market direction that is obvious.
Presently it is back to up and while there most likely will be a consolidation period which will be good for put selling, the move should stay up until the next calamity, which could be just a few weeks away.