On October 4th I wrote a post describing the Market Bottom that might be in place . I was buying some high beta stocks.
The market has rallied in an insane way since late in the day October 4th. I have now purged the extra beta I had purchased.
As with any rally, the believers are not with it yet. They need more volume, better breadth, more leadership, a better economic backdrop….
I am just looking for price leadership and companies with catalysts. These are stocks that I can own that are exhibiting price leadership and I can explain the catalyst in a sentence or two to my son Max.
I was seeing this with Intuit and Nuance (INTU $NUAN) so I added them a few days back (see my Stocktwits stream). I sold a little Apple (no reason so just dumb).
It is hard to buy with the markets up a straight 10 percent. It is really hard when they are up this fast after a nasty 3 month correction.
To do so, you have to block out all the front page news and statistics and watch the activity of leading stocks. They don’t care about CNBC, The WSJ, Talking heads, analysts and what happened last month.
By building lists during the bad markets these stocks just come to you.
The rally may end tomorrow and I may be stuck with these two new stocks in my portfolio. That happens. The market may also be at the cusp of a new major run of which these two new additions are the first of 8 new stocks to my portfolio.
I still believe October 4th was a major bottom and I expect the markets will be pulling me into 6-8 more names over the next 30 days.