Why I'm Not Buying

I've gotten some emails asking me why I didn't make any new buys in any of the model portfolios. I just do not buy into falling markets. Each morning I review my portfolios and look at each stock individually and ask 3 questions: 1) Is the stock trading below it's 20, 50 or 100 day moving averages, 2) What is the Barchart technical buy/sell and Trend Spotter signal, and 3) Has the stock lost 10% in either the last month or quarter? No single answer tells me to sell but after 45 years of investing you know when to cut your losses.

When do I buy back in??? First I decide if I want to buy back in at all. I look at the Conference Boards latest report on the Leading and Coincident Economic indicators, which at the present time is positive for both. Next I look at Barchart Market Momentum page and I note that at least 50% off all the stocks are trading below their 20, 50 ,100, 150 and 200 day moving averages. Last I look at the Value Line Arithmetic Index on Barchart as if it were a stock:

Barchart technical indicators:

• 40% technical sell signal
• Trend Spotter sell signal
• Below its 20, 50 and 100 day moving averages
• Relative Strength Index 37.54%

Again, no single one of these tests causes me to sit on the sidelines but after 45 years you get a sense of whether this is a rising or falling market.

I think you will agree that we are in a falling market and now is the time to trim from your holdings stocks that are not performing and let the cash you've raised sit on the sidelines until there is a more favorable investing environment.