IRA Investing: Don't Sell IRA Stocks at New Highs

The market gave us all something to cheer about last week as the S&P 500 finally joined the Dow Jones Industrials in making a new all-time high. Even the Value Line Geometric Average, which attempts to measure the change in value of the average stock on the New York Stock Exchange, joined the party and hit a new high also. So with stocks taking a bit of a breather so far this week, many IRA investors might ask, isn't it time to sell?

It depends. I like to focus on two important long-term indicators that can tell us what the current environment really is -- beyond the simple observation that we are hitting new highs.

The first indicator is sentiment.

I like to feel that I am going against the crowd when looking at my asset allocation. Meaning I want to be doing the opposite of speculators and smaller, less-informed market participants.

Currently, as I have shown in several charts published over the last few weeks, odd-lot investors and short sellers in general are still quite pessimistic about the long-term trend of the market. Their high level of short selling indicates that they are still worried about a major market decline similar to the one that occurred in 2000 to 2002.