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Reality Rap



It would be easy for me to say I am sorry that I haven't written anything today because I am so busy talking to clients or analyzing the market or... blah, blah, blah. Truth be told, I haven't written anything today because I have learned my lesson. Let me explain.

The greatest education I have received over the years is through the many mistakes that I have made. Funny how that works. The greatest growth typically comes through the greatest pain.

Anyway, the reason I bring this to your attention is to pass on one of my greatest lesson: WHEN YOU ARE CONFUSED DO NOTHING, SAY NOTHING AND DON'T PRETEND TO HAVE A STRONG OPINION IF YOU DON'T. Such is the case for me right now. I could print chart after chart and indicator after indicator to prove my negative or positive case on the market or any individual stock.

On the close yesterday, the charts would say to be positive for a trade to the upper end of the range outlined over the past few weeks. Then you'd see there is very little follow through on the breakout.

My problem is that I am part technical and part fundamental and I have mixed feelings on both fronts. Sure, I could do the Wall Street thing and pick a direction, find indicators or fundamental data that support it, ignore what doesn't and then begin calling my account base to espouse my unique insight. After that I would hope the direction was right and that my clients would view me favorably.

Ultimately, that would be living a lie. Analysis is an art not a science, and as a result there is always some level of educated guesswork. I spend hours and hours combing the indices and markets for a fundamental or technical edge. Right now I frankly don't have one.

This is a market that is being driven by something other than fundamental or technical analysis. That is obvious by false breakouts on key stocks like 3M (MMM:NYSE). On March 21, the stock made a very clear breakout on significant volume -- textbook stuff right? Then it totally fails and almost is at a breakdown point a few weeks later.

In bear markets, stocks like MMM don't break out like that. In bull markets, leading stocks like MMM don't fail like that.

This is a market where there is a good deal of guessing. I would rather act right than look right -- so I chose to serve my institutional account base and you Minyans the best way I can: I'll wait until I have something to say that I believe in.

No positions in stocks mentioned.
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