The market has certainly been on some kind of wild ride the last few days.The selloff on Friday was clearly a panic down but Monday's rally was arguably a panic up. If so, I am not sure anything is really resolved.
A one day decline of 2.5% isn't really capitulatory especially when the rally the next day is just as big.
The internals were not great for such a big day either. On the NYSE there were 52% advancing and 47% declining according to Yahoo Finance.
I also think that the huge run up in the financials after getting pasted on Friday, along with these other things leaves me questioning the market's short term health. But of course nothing may come from this concern.
I noted last week I was weighing the sale of one particular stock or adding to my double short position. About half way through the day I sold the stock, Starbucks (SBUX) but did not add to the double short. SBUX is a discretionary stock, a sector I am and have been underweight for a while. Discretionary is usually not a great place to be heavy toward the end of the cycle and this has been the right call this year, as measured by the Discretionary Sector SPDR (XLY) but Starbucks has struggled so I sold it.
Given the market action Monday I don't mind having a touch more cash raised.
From the bottom up SBUX has had trouble off and on with various estimates and while I believe people will always wait in line for a fancy coffee the stock has been a let down for quite a while.
If the stock goes up from here it will look like a bad sale and if the stock goes down it will look like a good sale. As I write this now there is no way to know but a touch more defense by lightening up in the wrong sector feels right for now.
3 comments:
Great photo for the market, but I hate to tell you that is what is coming not what has happened to date IMO.
Yes advances finally beat decliners at the end of the day but if you checked earlier in the day decliners were well ahead even with the market up BIG.
The next couple of months should be interesting. Oh well the last few years have delivered plenty of profits.
On the bright side for those able to minimize losses in the short run will have a truly excellent buying opportunity when the Fed is FINISHED lowering rates.
That's a puzzling stock. Every one I see is packed with lines going out the door and nowhere to sit. Plus they sell a tasty addictive drug. I guess with the relatively high PE you could say that's priced in.
I obviously can't refute that the PE is high but it has always been high and the high PE hasn't been an obstacle before.
Priced in? Maybe so? Apparently so? Either way, I got something wrong.
Post a Comment