Sunday, December 01, 2013

It pays to be cautious!

Markets have been on a tear since my last post on May 05.  Indexes have hit new highs repeatedly.  There were plenty of opportunities to make money in this market.  However, the recent new highs on the indexes have been on feeble breadth.  The advance/decline ratio I track is not providing the underlying support for this rally.  Not many stocks are leading the market higher.  The sentiment is at extreme bullish zone which doesn't bode well for the continuation of the rally.  Ofcourse, no one can predict when the rally would come to a halt.  It pays to be cautious rather than adventurous at this levels.  Keep the profit objective lower and cut your losses quickly to stay in the game.

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