Kill the Noise Redux – Time To Turn it Down

Did you hear that?  Yeah, I heard it too…many times already.  Annoying market noise, and it’s getting louder.  Bubble this, bubble that.  Value, over-valued, and bullish/bearish sentiment.  Everyone’s a technician when the fundamentals can’t seem to explain anything.   It’s now time to turn down the volume, the noise is deafening.  One of the challenges we have as traders is to try and manage our way through the unknown outcomes.  When confused or puzzled we often find comfort searching for opinions that give us solace or some clarity.  Unfortunately, these opinions are dangerous to follow.  Why should we avoid listening to market timing calls?  Because their time frame is NOT yours!   Look, not everyone is wrong, and I suppose over time that many diverging opinions might all be proven right, yet quite a few are not.  But as we all know, it’s the MARKET that tells the truth.   Below is an updated ‘reminder’ article about how to deal with the noise – turn down the volume.

So here we are with the markets once again tagging new highs, and the list of complaints gets longer. Oh, a correction is coming. We know it, but then those who are “out of the market” won’t feel any of the pain. I’m hearing that a 5% correction is coming, and that it would be healthy. Really? As I’ve said many times, it is futile to tell the market what it could and should do.

Our landscape is littered with gurus, experts and pundits giving really bad advice. CNBC recently started trotting out statistics, because, well, what else are they going to talk about?  Party hats are being ordered for new NASDAQ.

The market will tell you what to do. That being said, why even bother waiting for a correction? If I am long bullish names as I have been, I love uptrend days to unload stuff. Late last week were perfect examples. I took advantage of good demand and higher prices in order to book winners and take losers off my board.

I’m also hearing some doubts about the economy, and of course we are seeing some rather weak data. This may portend some economic headwinds down the road (namely early 2014), but the data predicted this market six or eight months ago. However, the market is not seeing any reason to be cautious.

Recently, I heard some guy comparing this market to 1999 and a frightful end because of scary heights. Funny, I was trading in 1999 and it was one of the best years ever for the markets and for tech. Absurd price levels? You bet, and if you were short that year, you got hung out to dry. If anything, the second half of 2000 was the period to be worried about, because it predicted a miserable 2001-2002, as the bear market in tech was in plain view.

And then there is the bond market, quantitative easing and the Fed. If I had a dollar for every prediction about the process and the outcome, I would have millions. Where and when do you get in the markets? Fed policy has made equity markets a fertile playing ground for a few years, and finally, at all-time highs, people are coming around to it? This is when we see the latecomers arrive at the party — at a time when I’m exiting, if only to keep the gains I have accumulated. I won’t worry about missing out on further gains.

I am in opportunistic mode here, booking gains where I have them and picking off ideas that have potential as I read the charts and technicals. I have been making far more bullish plays, because the trend is in place for the markets to rise higher. But overall, I’m not bullish or bearish, and someone on the sidelines who is getting involved at this late stage would face challenges.

Pay attention to what the markets are telling you, turn off the noise, and you’ll be in a much better place.  Bob Lang