Caution remains the best course of action as growth stocks continue to struggle and the market is in correction. Even though the Dow is still above its' 20-day moving average, former leaders like NIO and PTON have broken down hard. In addition, new potential leaders have also started to fail. I took pilot buys in HIMX and SI to only quickly see them reverse. In addition, breakouts to new highs are also quickly failing, as we saw in DKS and TME.
This type of action leads to the simple conclusion that this is not the best time to be aggressive and the prudent decision is to be mostly in cash. The market is clearly signaling that those who continue trade are doing so with extreme risk. In deed, cash really is a position and often the best one in a market that is clearly not uptrending.
What also alarms me is the lack of fear currently in the market. The VIX is only at 21 and not indicating any sort of panic what so ever. Clearly, most investors are either not aware or not phased by the damage done to growth stocks. We may need more time or another wave down before we get a major bottom.
I'm still very bullish for 2021 in general, but am in no rush to trade in a choppy or downtrending market. I learned the hard way to save my mental and financial capital for times when the wind is at my back. The market is will always be there. The key is to make sure you are.
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