In last weekend’s article I was cautiously optimistic on equities based on a nice tech rally. This week we were looking for a continuation of the move to start legging into some equity positions. Monday’s stock market action was good enough, but bond yields were falling again, leading us to be cautious. Today we had a discouraging reversal in the market. Just before noon we were up nearly 30 points on the NDX, only to drop 42 points in afternoon and close near the daily low, with volume building as the market sold off. The small caps didn’t even see a morning rally – they were under pressure from the open.
We never got our buy orders in this week, and as it turns out it was a good thing. This kind of action shows how tough it is to operate in this market. The reversals in a couple of leading techs like Apple and Amazon were particularly sharp. This is certainly a setback; now we’re back to waiting on the sidelines a little longer.