Time to Lighten Up on Sensitive Names

This column was originally published on RealMoney on July 12 at 11:31 a.m. EDT. It's being republished as a bonus for TheStreet.com readers.

Tuesday's action was pure bear market action. I always dislike using those types of terms because they obscure the ability to buy a General Mills(GIS) or a General Dynamics(GD) or a Genzyme(GENZ) or dozens of other stocks that are acting quite well.

But yesterday sucked a lot of people in. It was a day when you thought the Nasdaq 100 Index might be putting in a bottom, and today you are getting hurt even worse and giving back much more than any reversal yesterday could offer.

The real issue here is that into strength like yesterday, you have to lighten up, not buy, unless the company has no economic sensitivity.

You can buy some back today if you lightened up yesterday. But not as much as you sold.

Because I am hurting so badly in some of the economically sensitive names within my Action Alerts PLUS charitable trust, let me depersonalize it and focus on Deere(DE).

There are very few stocks like Deere, which is in the sweet spot of what is turning out to be a bountiful grain cycle. It has everything but raw costs going for it, and those could turn, judging by the decline in commodity costs from the highs.

It's been inching up slightly every day. Today that gets washed away like it was never any good.

That's just brutal. Meanwhile, the gods shine once again on the Kelloggs(K) of the world.

It is amazing to me how much the spring and summer of 2000 -- when the Fed tightened too hard and killed tech, but not soups, soaps and cereals -- is now repeating itself. The patterns are scarily similar when we could get a couple of up days, like yesterday, that suck people in, and then the stocks just collapse.

It is nauseating, and it tries the souls of men. I say overweight the soups, soaps, cereals and energy and underweight the shaky stuff, but don't be surprised if your underweight holdings wipe out any gains you might have.

I guess what I am saying right now in this tape is to define a goal, and the goal is to lose less money than you would otherwise.

Why not leave the table? Because there is a lot of stuff working and because the gains in good tech and cyclicals out six months, when I suspect, judging by my screen, the Fed will be loosening, might be worth taking some pain for.

Trim some of the more iffy stuff even down here? Yes, if you can't take pain, no, if you can ride through the water torture.

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