As I've written over the past several weeks, it appears that stocks are overbought and the markets look as if they might be headed south. We first started taking profits in investment holdings that we had about 2-3 weeks ago and we haven't put anymore money to work in the market b/c we believe stock prices are going to fall. While the markets haven't performed horribly over the past several weeks, there has definitely been a slightly negative shift that has taken place with respect to some lackluster corporate earnings and continued negative sentiment by the consumer (thanks to the increased payroll tax and the nightmare politicians in Washington).
The markets are back to their "no memory from day to day" behavior that I wrote about so much last year. Just over the past week, here's how the markets have performed:
Friday +149
Monday -129
Tuesday +99
Wednesday +33
Today (so far) -110
As you can see, there is quite a bit of volatility in the markets as money managers and investors are unclear of how stocks will perform over the next few months (I believe the markets will move down over the coming weeks).
This morning I was looking at the 'Vickers Inside' report which monitors whether business owners/employees are buying or selling there own company stocks, and the report was a negative one (I love watching what "insiders" do b/c they have a better handle on how business is going). The 'sell-to-buy' weekly ratio was 9:2 (amount of stock being sold compared to stock being bought). The last time the weekly ratio was this high was back in July 2011, right before the market got crushed to the downside. I'm certainly not saying or trying to forecast a large market drop, but I do think the possibility that we will see stocks move somewhat lower in the near term is very high.
Because of this and other research data, I've grown conservative in my approach to the markets and have over 60% of our assets in cash uninvested; as soon as we see the markets sell off, I will once again become aggressive in buying stocks and mutual funds.
So all that being said (written), we shall see if I am right in my belief that the markets are on the brink of a move to the downside..........
And finally on a brighter note, I mentioned last friday that I had bought Dell stock b/c I thought the company was going to get acquired over the weekend; well I was wrong b/c the company didn't get bought out over the weekend, they were in fact acquired on tuesday! While they didn't get acquired for $15/share, they were bought for $13.65, so the amount of money made was not as much, I'll still take the small profit on an investment made for 2 days! Like they say, even a blind squirrel finds a nut sometimes.
