Today was a historic trading day right before the election. Never have we had this much of an increase. I hope none of you have gotten greedy over this past 1.5 weeks of increase in the overall markets. I highly recommend you monetize some of your gains. For example, if you are up 25% in a matter of weeks for a particular stock, at least sell half of your shares and place a stop loss to protect your backside so to speak. Wouldn’t you be happy with a 25% gain for the entire year for your portfolio? If so, you should be content with a 25% gain in a matter of weeks. Don’t worry if the stock continues to go up because no one sells at the peak and buys at the absolute bottom. That’s why I say to sell half and use a stop loss of say 15% to protect your gains. Also, never manually input your stop loss as market makers see these positions. Just keep a mental note of it or keep track of it on a spreadsheet.
I expect the market to retest the 920 S&P 500 lows sooner than later. At this point, is when we want to buy stocks because there will be enough of a support on the downside to sustain a rally over the next few months. I think the natural gas sector is ripe to spike up during this period. UNG is a good fund to buy into once we test 920. Also, at this point, we will want to start thinking about acquiring additional shares in large stable companies trading at historically low valuations. I have compiled a list after researching companies that have strong cash balances, stable dividends, and clean balance sheets. Here is the list:
- Berkshire Hathaway
- McDonald’s
- Altria
- Johnson & Johnson
- Coca-Cola
- Wal-Mart
- Exxon Mobil
- Microsoft
Another way of participating in these large companies is through a fund, such as JPZ, a Nuveen fund. Keep in mind if the above stocks go up by 15%, this fund may only go up by 10%. However, if there is a sell off in the market, this fund will be less volatile.
I still wouldn’t go all in. Still maintain a strong cash balance because this market will be volatile for the near future. Be sure to monetize some of your gains because many of the technical indicators reveal that the market is ripe for a downward move. Just keep buying small lots on downward moves.
No articles for today as I imagine all of you are psyched to watch the debate tonight. I hope all of you here in the US have voted as it is exciting times globally and here in the US.
cheers,
Moolah
