The market has fallen somewhat predictably to a more reasonable perch. Unfortunately for the bulls, even though things look decent for a small “snap-back” rally the problem is that the market is a bit overvalued, over-owned, and bubble-esque. The forces at work here are the usual suspects: fear and greed. The fear is not very palpable considering it’s “sell in May and go away” season and given the high valuations that exist for many of the most beloved technology IPO’s and more speculative growth concerns. Currently, the Hedgephone Market Model is still bearish though we wouldn’t be suprised if stocks make a small-ish comeback over the next few days. After all, the market rises around 2 out of every 3 days and it is election season — the Dems won’t want the “progress” they have made on the economy to slip away from them and even though the Repubs want Obama to lose, they can’t stand missing a rally.
All and all it’s a good time to be on the sidelines right now in our view. Having a good work-life balance is one of the biggest keys to investment/trading success in our view. Good health = wealth according to W.D. Gann and we couldn’t agree more. Another tenet of Gann is to use stop loss orders for every trade. Again, after years of experience in the market as hedge fund professionals and traders, we agree with Gann that stop loss orders are highly important.