IBD’s Big Picture has been remarkably accurate over the course of the last year. You got out of the market for the Q4 debacle following their advice and got back into the market in early Q2 for much of the recent 60% surge in stocks. They’re turning a bit more cautious of late though they’re not giving an all out sell signall:
With the market under pressure, buying stocks becomes a riskier activity. While investors may not entirely avoid buying stocks, raising cash is prudent. It’s like a flashing yellow traffic light. You don’t have to stop, but it’s no time to barrel ahead.
Themarkethas flipped the flashing yellow light five times since the uptrend began in March. In the four previous cases, the uptrend resumed after four to eight sessions without much damage. It could happen again, but there’s no guarantee.
We’ll keep you updated in case they turn to a cash position. Thus far, they have been prescient….
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.