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The Intelligent Trader's - Long and Short of It
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From: Robert A. Christy Editor/Publisher, ‘The Intelligent Trader’ http://www.intelligent-trader.com http://www.christyinvestments.com
Date: August 30, 2009
The Numbers
I am going off in a different direction this week. Chris ‘The Intern’ Kellner headed back to college on Thursday and I am taking a few days to pause and reflect back on the past three months. I’ll be writing about our lessons learned over the next few weeks.
The talking heads have my blood pressure in the danger zone. In March, people who dared talk about an improving market were shouted down and told to take a look around at justify the carnage. Today, these same pundits shout down anyone who dares question the validity of a new bull market.
The advice being bandied about on the airwaves is borderline criminal – period.
Am I concerned? Yes – I am. The difference is that I have been long stocks since the March bottom. Along the way, I picked up a couple of shorts (I was a tad early) and raised some cash. I’ve been long gold, silver, and oil which has weighed on my performance.
This week, I am going to show you where we are in terms of risk.
For starters, August is looking to end on a mushy note and
Weekly Momentum has turned NEGATIVE for both the DJIA and the S&P 500.
This is important to because momentum is a fairly slow indicator and once it flips, tends to stay that way for a while. The average length of time that momentum stays negative is 7 weeks.
Here’s a guide to the tables below.
Bullish Percent is the percentage of stocks in an index or sector that are on BUY signals.
Example – Bullish Percent of the NYSE is 80% - This means that 80% of all NYSE stocks are on BUY signals.
Xs = Offense Os = Defense Green Highlight = Favored Yellow Highlight = Average Red Highlight = Unfavored Risk Level: 0-100 <30 is low risk >30 is high risk
Major Index Bullish Percent
The indices are now all above 70% and in high risk territory. The last time the indicators were this high was January 2004. We are pushing the envelope here and there is not much room left on the upside.
Major Sector Bullish Percent
The sectors below are the major sectors that make up the S&P 500. The only sector on Defense is the Telecommunication sector. The only sector exhibiting good field position today is Energy.
Sub-Sector Bullish Percent
The point I want to make is this. Investment decisions need to be made based on sober and rational analysis. The worst decisions are emotional ones. Bubbles form during emotional times. At the worst possible time psychologically, bubbles burst. When bubbles burst, markets crash.
Now – do you think it’s time to jump headfirst into this market? Or, do you think it might be prudent to take a little money off the table, do something to protect your profits and wait until the risk level comes down to a more acceptable level?
That’s about it for now. Let me here from you if you have any questions.
Robert Christy
P.S. We continue to make changes and upgrades each month at the Intelligent Trader. In addition to our blogs, you can now sign up and follow us on:
Twitter: stcktradr Facebook: The Intelligent Trader and/or Robert Christy (Atlanta area) Skype: stcktradr
P.S.S. The currency market (forex) is the place to make money this year. If you’d like to know more about how you can participate in this, just send me an email and I’ll send out the information to you.
P.S.S.S. Please fee free to forward this to your peers, friends and anyone you think would benefit from its contents. They will thank you for it - and so will I!
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Robert Christy is a professional currency trader, stock trader, money manager, author and speaker. Mr. Christy is the President CEO of Christy Investment Group, Ltd., a fee-only registered investment advisory firm. He is also the Managing Partner and Portfolio Manager of Crabapple Capital Group, LLC and the editor/publisher of The Intelligent Trader, a subscription based long/short trading service. At the time of publication, Mr. Christy may from time to time write about stocks in which he, Christy Investment Group Ltd, Crabapple Capital Group, LLC or The Intelligent Trader has a position. In such cases, appropriate disclosure is made. Under no circumstances does the information in this column represent a specific recommendation to buy or sell stocks. Mr. Christy appreciates your feedback and invites you to send it to rac@intelligent-trader.com .
Robert Christy The Intelligent Trader
The Christy Investment Group P.O. Box 625 Alpharetta, GA 30009-0625
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© Copyright 2009 Robert A. Christy, The Intelligent Trader
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