In a new market uptrend, getting positioned right is everything. Not chasing, not letting the average cost of well established positions creep up, is very important for the inevitable 1st pullback. With the NASDAQ punching through an 11 year high today, this would be a logical area for that pullback to occur. My best guess (and its only a guess) is that we get our first pullback, possibly next week or the week after…after all the market has been running since late December without taking a breather.

 

If you are moving a high percentage of your portfolio into the market now, that allocation is at a high risk. It is critical to only buy stocks at proper pivot points on the chart. If you are adding to positions, be careful and keep a close eye on your average cost. Those who are plowing in or initiating several positions today are more vulnerable. You may be better off waiting and adding to core positions if you are seeing support during the pullback.

 

Getting the first market pullback right, in a new uptrend, becomes critical when looking at possible compounded gains at the end of a market move. That’s why it’s so important to resist chasing and the temptation to add a lot more exposure while we are extended this far in the move.

 

Best Returns,

 

Scott O’Neil

President, MarketSmith Incorporated

Follow Scott O'Neil at Twitter.com/WScottOneil