The Market Landscape is Changing - You Need to Change With It
Published on August 3, 2018 @ 11:11am
As suspected, the markets are under pressure once again following a minor retracement back to the upside over the last few days. However, like we said in yesterday's edition, these markets may still want to move lower before potentially moving higher again. Specifically, we still think 7,350 on the NASDAQ Composite and 2,750 on the S&P 500 is possible.
Volatility on a short-term basis continues to be the name of the game, and there's no question the idea of buy and hold investing is really starting to become a bit of an issue - regardless of the idea in question. It doesn't mean we shouldn't continue to hold for the long haul those handful of world changers like the FAANG stocks, but it does mean everything else out there should be dated - not married.
Although from both a fundamental and technical perspective we still believe the major indices will find new highs again, the markets have clearly adopted a news driven stance, and more importantly seem to be providing far more credence to those ideas that are technically attractive on a short-term basis, along with those ideas that appears to have very attractive "near-term growth" - not so much those ideas with long-term growth implications.
In other words, if the chart set-up is there, and the earnings over the next quarter, or two at the most, can support higher levels in the near-term, then the idea in question is in a good position to trade well - no matter what the long-term growth implications might suggest.
There's no question the buy and hold strategy has served investors very well for just under a decade now, but when you take a step back and look at the history of the markets, there's definitely a time to be aggressive with a buy and hold strategy, and a time to be nimble. Meaning, if and when these markets finally implode like they did from late 2007 until the Spring of 2009, it will be at that point we'll re-address the entire buy and hold mentality, because it will be at that point investors should clearly exercise a long-term buy and hold strategy again.
Basically, with our belief that the potential upside on a long-term basis isn't as much as the potential downside once these markets top out, we're going to focus strictly on those ideas we believe can provide you with some nice gains on a short-term basis - both bullish and bearish ideas.
Just look at the previous picks section of our web site. We've done exceptionally well with those ideas we didn't hang on to. And, many of those ideas other investors chose to exercise patience with clearly haven't done well since - no matter how much potential the idea in question has on a long-term basis.
There's no question our long-term fundamental prowess has stood the test of time, but it appears now that our short-term technical charting prowess has been the real feeder for ours and your gains this year.
The bottom line is we definitely believe in long-term buy and hold investing, but the current and forward looking market landscape clearly continues to suggest investors' patience doesn't seem to exist now like it used to. Stocks have becoming a dating tool on a short-term basis for short-term profits, and money seems to move around far more actively now than ever before.
There will be a time for long-term investors to aggressively add stocks to their portfolio on a long-term basis again, however, that time will only like be once these markets have finalized the bottom of a bear market - like we saw in October of 2002, and then again in March of 2009.
And, considering it's our job to tell you honestly and objectively what we think about these markets and individual stocks on a day-today basis, the harsh reality of all of the above is simply how we're starting to view these markets - at least until proven otherwise.
You can choose to do the same, or continue to exercise some patience, as we do believe there are still many companies out there that do have the necessary fundamentals to warrant higher levels ahead. However, based on everything we're saying here today, the long-term buy and hold investor needs to understand many of these ideas may take some time to start performing.
Here's what you can expect from us going forward - until further notice.
A) A complete focus on short-term trading ideas - with an emphasis on short-term technicals - on indvidual stocks and ETF's we think can provide you with attractive short-term gains - both for individual swing traders and options traders looking to profit from ideas over the course of several days to several weeks.
B) Those short-term ideas we put out there will also have what we believe to be good fundamental long-term growth implications for those who still choose to continue exercising a long-term buy and hold strategy. However, until further notice, we will not be sticking with anything for too long.
C) We'll provide more active updates on any significant fundamental and technical changes to any short-term ideas from day-to-day and/or week-to-week.
That's the gist of our view and stance of the current market and forward looking landscape now. Be rest assured, however, we'll continue to put our best foot forward in an effort to provide all of you with major average beating gains on a go-forward basis.
Keep in mind, we're still always here to answer any questions or provide opinions on any individual stock - even if it's something we haven't suggested. Simply email us or give us a call. We get back to everyone.
John Monroe - Senior Editor and Analyst
