Stepping Back

Well, here is the ultimate bull signal... I am pulling back a bit. I have sold several stocks and have not re-invested the funds. Actually had a couple with very good gains (VR and EGY) and one not so good (PRLS).

I guess I feel we're still in a simple bear market rally and that there will be more blood on the streets at least through January with more forced hedge fund selling. Also, I am kicking around the idea of buying a house in the Spring and wanted to pull some $ out for a downpayment. Might as well buy something tangible.

It was interesting that the market went up on Friday despite the dismal jobs number. I suppose some people are becoming convinced that between the lower gas prices and govt stimulus that things will turn around more quickly. But I am not so sure.

My thesis that the Chinese stocks will hold up better is bearing some fruit. They had gone down a lot, they have stronger balance sheets and China is still growing at 7%+. The group of 12 Chinese stocks I began following in the fall are down 17%, while the Russell 3000 is down 31% in the same stretch.

One signal I may begin watching on when to get fully invested is (Decision Moose). It was mentioned on the Yahoo groups site and has had a tremendous record in timing the market. Obviously I am not doing a very good job on my own.

I did think it was extremely positive this week when JNJ announced they were buying Mentor at a 100% premium. If these S&P 500 firms begin to loosen up on the purse strings and go shopping amongst the sales in the Russell 3000, it could really provide a much-needed lift.