Time To Raise Cash And Take Profits?

The short-term downtrend continues although the market decided to throw a party towards the end of the week.

The NYSE number of stocks above the 50-day has been declining for a week (confirming the PMO Index above) even though the NYSE Price Index has held steady. In my view, that is a signal to take partial profits and to raise some cash.

At this point, I don't think anyone needs to be told that the market has run-up to a level where it is in danger of a pullback. We all know it. Bullishness is frothy, valuations are high, etc.

So, I think we know for sure that the market is extended but we aren't entirely sure that selling is the right thing to do because this market could push higher and we could miss out.

However, in my case, the trade plan is always to raise cash into market strength even though there have been times that I missed out on some of the remaining gains. It's just that there have been so many more times where selling was the right thing to do. I think raising cash is the strategy with a higher probability of success.

In addition to when to sell, I have to decide what to sell. I was certain earlier in the week that I wanted a sizable amount of cash in my account, but I was just not sure what I should be selling. Should I hang on to the winners and sell the under-performers? Or should I be trimming the winners to capture the gains, and let the other holdings have some additional time to play catch up?

Since I couldn't decide, I raised cash from both categories of stocks. And now, I will raise more cash when this trendline is broken as shown in the chart below. From the looks of this toppy MACD, a break in the trend could be next week. But don't ask me yet what I will sell when the time comes because I don't know.

There aren't too many charts that I can find that cast much doubt on this bull market, but here is one to consider shown below. This average hasn't come close to its Oct-2018 high.

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Disclaimer: I am not a registered investment advisor. My comments above reflect my view of the market, and what I am doing with my accounts. The analysis is not a recommendation to buy, ...

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