Stock Market Overview
Signs of investor concern started showing in stock market trading this week.
The Dow Industrial average jumped by approximately 700 points or almost 3% this week.
As the Dow accomplished its levitating act the NASDAQ did its version of a swan-dive from the 15 meter board by shedding about 41 points or about 0.60%.
This type of stock market divergence typically is not a good sign.
Investor action is largely driven by the perceived effect of President Trump’s tax plan.
Actually passing the tax plan is completely separate issue!
Throw into the mix the possibility of a government shutdown in early December and you have a great recipe for nervousness.
However, the ongoing economic and company earnings news remains positive.
But that Shooting Star and Hanging Man candlestick shown in the broad stock market image should not be ignored!
Stock Market Sector Strength
The sector strength score is 9 strong and 1 weak.
This score illustrates investor confusion as severe sector rotation occurred this week.
The individual sector and market strength charts show the last time the broad market developed weakness was in late summer.
That period of weakness presented a period of about 3 weeks to identify and add quality stocks to portfolios.
It remains to be seen if this is a similar opportunity or if it will develop into something worse.
However, just because the status of the broad market is bearish, don’t sell all your positions at one time.
The most profitable investment strategy is to let market weakness sell stocks for you at preplanned price levels.
Having a sell plan allows you to easily hold the winners and sell the losers.
Profitable Investing Posture for the Upcoming Week
Caution is advised for taking on new positions.
I suggest you tighten up profit-keeper and stop-loss orders.
Take proactive risk management actions just in case the current weakness turns into something worse than a buying opportunity.
Time will tell.
The model stock portfolio sold 12 positions as sector rotation occurred this week.
Click this link to view the portfolio sales, remaining positions in the model portfolio, sell price levels, and all position profits.