When stocks or indexes go parabolic it is like a freight train with no brakes. Yet another week of multi-year highs for the bellwether indexes with the S&P 500 now more than doubling from the crash of 2008. Take a look at the parabolic moves on the charts of the big three: Dow Jones Industrial Average chart – S&P 500 chart – Nasdaq chart. Now if you have been long this market there couldn’t be a prettier sight.
However, even the pros are finding it difficult to invest in this type of market. When equities or indexes have these types of parabolic moves, it’s hard to put new money to work because of the seemingly overbought conditions and expectations of a pullback. Also it’s hard to stay in cash for no one wants to miss out on this extraordinary bull run. And finally how in the heck could you ever short sell this kind of market?
So what in the world does one do? One thing I have learned through the years is that sometimes it’s better to be patient than to speculate on what’s next. This could be one of those periods in time where it’s best to simply do nothing and wait for some type of catalyst before you act.
Have a great weekend 🙂