Written by Lance Roberts, Clarity Financial
Every week, we are fortunate enough to gain numerous subscribers to our weekly newsletter. So, first, I certainly want to welcome you to our missive, but I also need to brief our newest readers where we have been positioned over the last couple of months.
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On May 4th, we penned: “It Never Hurts To Ring The Cash Register“. We suggested taking profits and reducing risk in portfolios after a stellar run from the beginning of the year. We made specific recommendations to our RIA PRO Subscribers (Try Free For 30-Days) at the time:
“A common theme through today’s report is ‘Profit Taking.’ Over the last couple of weeks, we have continued to discuss taking profits and rebalancing risks. Yesterday we sold 10% of our many of holdings prior to earnings to capture some profits. We also added to some of our Healthcare holdings, which have been under undue pressure and represent value in a market that has little value currently.”
We also said:
“From a portfolio management standpoint, the reality is that markets are very extended currently and a decline over the next couple of months is highly likely. While it is quite likely the year will end on a positive, particularly after last year’s loss, taking some profits now, rebalancing risks, and using the coming correction to add exposure as needed will yield a better result than chasing markets now. Given that every given year has some corrective action in it, betting this year will be different is a low probability event.”
What we didn’t know at the time is that the May sell off would start the next week.
Then, June 1st, we wrote “Selloff Overdone, Looking For A Sellable Rally“. To wit:
“In the very short-term the markets are oversold on many different measures. This is an ideal setup for a reflexive rally back to overhead resistance.”
Again, for our RIA PRO subcribers, we recommended taking on index positions to participate.
(Click here for the unlocked report.)
- The “buy” signal in the lower panel was massively extended, as noted several weeks ago, which as we stated, suggested the reversal we have seen was coming.
- The correction last week has set up a tradeable opportunity into June.
- Short-Term Positioning: Bullish
- Last Week: Add 1/2 position with a target of $290.
- This Week: Hold position (full weighting)
- Stop-loss remains at $275
The rally we have been discussing since the beginning of June has been a good trade and increased the value of our portfolios.
However, for most investors, it has simply been a recovery back to the same level almost 2- months ago.
This is why managing risk is important.
Okay, now that you are up to date, let’s talk about what the Fed said, didn’t say, and what it means from here.
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