The S&P 500 fell by 1.1% on Tuesday and relinquished a substantial portion of the gains made last week.
This U-turn isn’t a surprise for readers who were advised in last Friday’s free post to cut through the growing multi-month highs by taking off some profits. The market is choppy and it is essential to make profits and lower the risk.
Interestingly, anyone still holding any stocks experienced a significant loss in their finances.
Buy when you don’t want to buy and sell when you don’t want to sell. Last Monday, readers were encouraged not to sell until something dramatic happens, and as expected, the S&P hit the 4,200 thresholds soon after.
There is no need for a directional change at this point. Last week, the market was indecisive, and this week it is choppy. Anyone who thought the market will break down last week was just as wrong as those that thought it would break out this week. Always sell when you are happy with the profit and buy when the market dips.
The market will move directionally sometime, but this is not the time. Since institutional money managers are on summer holiday, choppiness and indecisiveness in the market will persist. Profit-taking should happen whenever there is an opportunity, or else there won’t be any left.