I see Warren Buffett is on CNBC once again. What I wish someone would ask him is what would he do if he were just an average guy with $100,000 to invest. What would he do? I would guess he wouldn't be buying a railroad stock. Buffett is a very interesting guy, but I don't think his investment approach has much relevance to most individual investors these days.
We definitely have a negative bias in the action today, but it has been very slow trading. Selling has been steady but not particularly aggressive. We are picking up a little more to the downside now on a so-so bond auction which is pushing the dollar up a bit more, but given the extent of the move over the past week, it is still a very minor correction so far.
The biggest problem I see is that the charts of the major indices look much better than many individual charts. Small-caps have been lagging badly, and that is resulting in fewer new highs and tends to create quite a few charts that look like shorts. If you just look at the SPDR Trust (SPY - commentary - Trade Now) or Diamonds Trust (DIA - commentary - Trade Now), things look pretty good. We are a bit extended and need some consolidation, but those charts look like potential dip-buys rather than tops.
Right now the bears have weaker oil, a stronger dollar and a poor bond auction working for them. That is what is driving us.
P.S. Will you be there when Cramer makes his next move?
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Rev Shark Blog Oil Gives Traders a Reason to Take Profits 11/12/2009 11:56 AM EST This should help eliminate some of the overbought condition and allow for better entry points.
Rev Shark Blog Play the Pattern Until It Breaks 11/12/2009 7:30 AM EST We could see a bit more upside then sideways trading before some sharp down days to close the month.
Rev Shark Blog Watch the Dollar 11/12/2009 10:27 AM EST If the greenback keeps improving, the profit-taking should pick up sharply.
James "Rev Shark" DePorre is the author of Invest Like a Shark: How a Deaf Guy with No Job and Limited Capital made a Fortune Investing in the Stock Market. He is founder and CEO of Shark Asset Management, an investment management firm, and he also operates sharkinvesting.com, an interactive online community that serves and educates active investors. DePorre holds business and law degrees from the University of Michigan, is a member of the Michigan Bar Association and a former tax attorney and CPA. He lives in Anna Maria Island, Fla., with his wife and two children. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Rev Shark appreciates your feedback; click here.
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