Timothy J. Truebenbach is the
President of True Capital Management and general partner of True Capital
Partners LP, a hedge fund. He uses a disciplined model that trades on the
intermediate-term time frame. For a free trial to Tim's Nightly Stock Analysis
Report
click here or call
888-484-8220 ext. 1.
This week has been a welcome relief
from last week’s selling and distribution in the stock indices other than a few
cautionary notes to stop some of us from loading up on stocks!
Tuesday’s trading showed that there are still a few sellers lurking. The
indices, S&P 500 and NASDAQ in particular were unable to achieve new highs as
they gave up some ground in the afternoon and saw heavy trading.
Last week’s trading also showed us a big difference between large cap leaders
and smaller-cap leadership. The latter did everything from rolling over
completely in names like Tower Group (TWGP) and Garmin (GRMN) to steep
corrections in a name like First Marblehead (FMD) to a decline, shakeout (that
got yours truly) and subsequent rally in a name like Digital River (DRIV).
The big names like Google (GOOG), Apple (AAPL) and Cisco (CSCO) do not rise as
rapidly, but they sure do pull back nicely!
After determining your individual risk tolerance, it is a great decision to
balance your risk among these different asset classes to properly take advantage
of a broad rally such as the one we have been seeing since mid-August. Since
distribution has reached questionable levels, it will be important to monitor
this market and the action of leading stocks throughout this week. If we see
strength turn to weakness in either case it will be time to raise cash levels.
Overall, we remain in a confirmed uptrend where stocks are a
great place to have some money working. Europe has forecasted sound growth for
2007; the U.S. economy appears to have avoided the hard landing; Greenspan
(that’s right, ex-Chairman Greenspan) has stated that the worst is behind us for
the housing slowdown and the stock market itself has pushed higher with plenty
of leadership. In considering all of these factors, now is a great time to keep
all investment options open and make sure we are all working towards our goals.
