We have some volatile action today, as a second move up is now failing. I'm particularly concerned about the weak small-cap action on my screens. Some of the little guys are suffering some hits today, which indicates that some of the hot money may be heading for the sidelines.
Oil is weak again and that doesn't seem to be helping a whole lot at the moment. Lower oil as a market-driver may be yesterday's news.
Even if you are wildly bullish and believe this market is going to go much higher, that doesn't mean that you shouldn't take some steps to lock in profits and protect gains along the way. The times I get in trouble are when I allow my view of the market to offset my trading discipline.
It is very easy to let positions slip when you believe the market will stay strong enough to bail you out over time. It makes it easy to do nothing and hold on rather than do the more difficult thing, which is to take action and do some selling.
I don't know where the market is going to be when we end the year, but I would make a substantial wager that we have a pretty good pullback in the next couple months. Even if I'm wrong about the dip coming, we can't be so passive that we don't protect our positions along the way.
Rev Shark Blog Not Many Catalysts 10/30/2006 4:14 PM EST Also, the bounce today came on much lower volume.
James "Rev Shark" DePorre is the founder and CEO of Shark Asset Management, an SEC-registered investment advisory firm. 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 to send him an email.
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