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Navigating the Sell-Off


Think time and price, style and patience.


The broad market continued to churn higher, with the S&P 500 remaining above the 800 level after we achieved the high volume close we were looking for above 840 on a broad-based bullish move off the Wells Fargo (WFC) news that extended the financial sector rally.

As I indicated March 27, the upside move near 840 on the S&P 500 expanded our upper trading range and resistance level to the 870-880 level.

Last Friday, we hit an expiration week intra-day high of 875.63. That was close enough for me to book profits on the small staged buys I had made around my core positions on the S&P 500 move above 800. You'll never go broke…exactly.

Last week, the expiration-fueled market was aided by Goldman Sachs (GS) reporting after the bell Monday. Although due to a report Tuesday morning, great numbers and not cutting their dividend as had been rumored on the street, kept the financial rally going. Not surprisingly, there was a "sell the news" reaction by the market as Goldman pulled back to around 112 before moving back to its basing level at 120. Goldman is pulling back today, along with the entire financial sector on the Bank America (BAC) news that net charge-offs rose along with losses in their credit-card business.

Concerns also hit the markets today on the JPMorgan (JPM) analyst report that there will be a need for more capital by the banks. There was also the ultimate GM (GM) outcome concern and the administration's jibber-jabber about the banks turning the TARP money into common stock. Nothing like some big-time stock dilution and government bank nationalization talk to knock the Bank Index (BKX) down 15% and the S&P 500 down over 4% for the day.

As most regular readers know, I'm a Bloomberg TV and guy, where, in addition to numerous print publications, I frequently post and write.

You'll now find me on the Minyanville Buzz most days along with Smita Sadana (who has a brilliant new Bull-Bear premium content on the site); Toddo Harrison; technician Jeff Cooper; Jeff Mackey and Jon Najarian from Fast Money; Jeff Sauter; Tony Dwyer; and Steve Galbraith to name just a few regular contributors.

I also know many of you receive information from several different sources and I appreciate readers sending me excellent articles, TV clips and information from numerous publications and sources. What I find fascinating today is the great divergence of opinion regarding where we go from here, and whether this has been a rally within an ongoing secular bear market or the anticipated recovery that's historically preceded the real economy by 6 to 9 months.

My response is: I really don't care. I don't try and pick market bottoms, market tops or try and time the market. My long-term income-oriented objective is to build low -cost-basis diversified core positions from which to trade around, while collecting sustainable dividends from my cores in a retirement-oriented portfolio.

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Position in FPL, SPX

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