Morning Market Thoughts

Happy Valentine’s Day everyone. Futures are down a bit this morning, but not enough to get your attention. After the last few days, a rest is a healthy development. This could turn out to be a very brief rest…or it could amount to more. What’s the catalyst? Fed chair Janet Yellen will be testifying before the Senate Banking Committed today (10 am ET) and tomorrow. Based on her stated outlook on monetary policy, new buyers could materialize if she gives a dovish testimony, or new sellers could rear their angry heads if she hints at a series of rate hikes. A rate hike in March is probably priced in by the market. Traders will care more about the rest of the year.

My guess? I know so little about the Fed’s current stance that I won’t even hazard a guess. (Insert shoulder shrug here). It’s noteworthy that three Fed Presidents also have speeches planned today. So call today “Fed Tuesday”.

Just a general comment on equities. This is the best Wall of Worry I’ve seen in a long time. There is so much to worry about that the old adage “knowledge is power” isn’t particularly applicable in this environment. It seems like the more you know, the greater the urge you’ll have to stay minimally invested and wait for the “inevitable” sell-off/crash that will present a great buying opportunity. The less you know, the easier it is to trust what’s currently happening in the stock market and just go with the flow. And as I look at a 9 year chart of the Dow Jones Industrial Average, I think it’s very possible that we could see another 10% packed on to the current price. And if you’re in stocks that are leading the market, your returns can be much greater than that.

My current approach to our Strategy Sessions is to focus on stocks that are working RHRN (“right here, right now”). On any given RHRN stock, most days are NOT good days to be buying. The stock is in a strong uptrend and rewarding current owners; but potential buyers would be chasing the stock and taking a risk that the stock will correct shortly after they’ve bought it. Better to wait for a future opportunity when the stock takes a rest in the ebb and flow that marks all uptrends. So we focus on staying in the stocks that are working, and identifying low-risk entry points in those stocks.

We also focus on spotting good setups that have the potential for reliable buy signals allowing us to buy stock early in its move…but not so early that we’re sitting around holding a stock that’s doing nothing. If we’re in a stock, we need to balance patience with our desire to see the trade be profitable.

The forum has been rocking lately, with a lot of great analysis and trade ideas. At least check in once or twice a day. Posting is optional…but you can leverage the collective knowledge of the Mentor Community by simply reading what others are saying. And don’t be shy in asking questions or making suggestions. It’s a stress free environment. Everyone is there to help others…and be helped by others. Hope to see you there!

–Dan

(Note: if you just realized it’s Valentine’s Day, you’re a behind the 8 ball. Flowers are always nice. Candy — um, not so much. Not anymore. If nothing else, hop on Google.com and find a massage facility near you. Then go to Vistaprint.com and get a free design template for a gift certificate, and give her (or him) a gift certificate for massage. Guaranteed to be a hit. Just show up with something, or you’ll end up with nothing).

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