Patience Will Win

The market is necessarily in the process of working off its overbought condition. At this point stocks look to slightly retrace or trade in place. It is impossible to project how long this process will take to work out, but until it does trading is likely to be fairly boring. We fully expect the market to make another leg higher from the move started mid October. It is important to keep the big picture in mind and stay patient as we wait for good set ups to emerge. Currently a few sectors, such as gold and utilities, look to break down creating some shorting opportunities. Nevertheless, we believe the real advantages in this current environment are to be found on the long side. It would be better to keep cash ready to deploy once the market starts moving again rather than trying to force a difficult countertrend trade on the short side in the weakest sectors. We have booked some nice profits recently and we expect to add to those gains so we ask everyone to remain patient as we let this very healthy consolidation process work itself out.