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The Day Ahead: Spread Your Wings Like a Seagull

I'm tellin' ya, picking stocks and tracking the market is uber fun. I learn new stuff every single day -- and today, before I jump in to thoughts on the market, I wanted to pay forward some of that education, putting context around a couple of characterizations of the environment that you may be hearing this week.

"Slow grind higher"

This means stocks won't go higher in every session, and there will be periodic setbacks. This saying is so broad and dismissive that it usually brings me a chuckle.

"We love stocks for the long term."

Be mentally and physically prepared for short-term portfolio pain. If you are able to stomach volatility, stocks will be higher five to seven years from now as intrinsic value is realized. Okee dokee.

"Eventually we will have a recovery around the world."

Huh? Note this is usually support for a long-term bullish thesis.

These are the various opinions on stocks and the overall market that I have had to digest over the weekend, much as you have had to do. Why does it feel as if the rug is being pulled from under our feet as the smart money seeks to unload? I didn't have that sense Monday, but the feeling did perk up that evening -- which prompted me to concoct that "World is Ending, Sky is Falling, Head for the Hills" investor survival guide for Tuesday.

When the market opened for business Tuesday, I thought the coast was clear. I figured there would be indiscriminate selling across sectors, renewed vigor in asset-inflation trades SPDR Gold Trust (GLD) and iShares Silver Trust (SLV) and that leading issues would return to the land of green.

But, midway through the session, the climate took a turn for the worse. I'm not sure if it was the perpetual drumbeat of doom and gloom finally sinking into the minds of the bulls with shaky hands, concerns on the election outcome or a presently unforeseen development. Nonetheless, key points in my survival guide were violated, leading me to believe it's OK to state a move to the sidelines is warranted. In other words, you might want to rein in long exposure.

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Chart of I:DJI
DOW 17,660.71 +9.45 0.05%
S&P 500 2,050.63 -0.49 -0.02%
NASDAQ 4,717.0940 -8.5450 -0.18%

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