After the modest sell-off last week, M&A; was yesterday’s buzzword, and the markets rallied higher in “normal” fashion. These days, that can be interpreted that a slight pullback is always followed by a rally sufficient to make up the small losses; that is until it no longer works and the trend ends.
Some readers have commented that they exited the market as weakness surfaced last week. Again, my mode of operation is not to make emotional decisions but let the market tell me when it’s time to get out.
There is no harm in taking profits early, and your comfort level should determine if you have reached this point. There is no sense in following any strategy if you don’t have the stomach for it.
As a point of reference, last week’s drop pulled some of our holdings only 2.5% off their highs. In other words, more downside action is needed before our trailing sell stops kick in.
We’ll sit tight and let the stops be our guide as to when to exit knowing that a trend reversal appears to be likely at that time.