Market. He thinks the market breadth has been slowly expanding since March. There has been no major correction that has occurred while market breadth was expanding. The ValueLine 1700 stock index has hit an all-time high, telling you it is not just a handful of tech stocks leading the market higher. He thinks the market is just starting the next bullish market surge. There are more people short the S&P500 than in 2015. Normally, markets reverse when everyone is “hanging out over their skis” – we are not there yet. He holds 80% of their assets in the US and have been reducing their exposure in Canada due to the current investment horizon.
Technicals and trading. On technical charts he never will make a decision against what the technical chart is saying. He likes to invest in leadership sectors, like inflation based stocks now. He then will look at 150 day moving averages, and would not sell when the price was well below the moving average and he would not buy when the price was well above the average. He likes Point and Figure charts to scan for higher highs and higher lows.
Should I sell my negative holdings as the market is trading a record highs? This requires the leap that you are moving on to a better place. Would I be a buyer of these holdings today? If not, then take at least or half or more off the table and watch how things progress. If they are not in the sunshine, be careful. You want to own things participating now. There are many months of higher stock prices yet to come.
The home building and material sector has gone through a correction over the past few months. He believes the bull cycle will resume and thinks this could be starting now. He just doesn’t think this is one of the leaders in the group. He would like to see a move back above $145 before he would get excited. He would favour Home Depot instead.
This group has had a great run, but there is a lot of optimism priced into the space. What is coming next is the heavy lifting, having to show the money, so to speak. He is actually short the ETF HMMJ-T now. He is worried there was now follow through on stock prices, when the news of legalization was released.