After last Friday’s best gain for the year, the market is less than 0.5% from its all time high level.
When you get to those kinds of markets, one of three things is likely.
There’s plenty of evidence that shows that new highs beget new highs.
There’s also plenty of evidence that shows that new highs make traders nervous and they lead to profit taking.
It’s hard to go onto new highs if others are cashing in their chips.
Then, there’s always the possibility of treading water while most are just trying to see what the next guy is doing.
As all of this is unfolding, there’s reason to believe that the first possibility has already become true.
We tested and then surpassed the 20,000 level and on the way toppled record after record.
Lately, though, we’ve been treading water, but what we really haven’t seen is much in the way of profit taking.
If you were to listen to all of the talking heads, what we’re in store for right now is the Trump Correction that all expect to come after the Trump Rally.
I have no clue, but what I do know is that as I collect more cash, it’s getting harder and harder to find anything that seems worth buying.
Instead, as has been the case for the past few months, it’s just the same old names, over and over again, as the pickings are getting really slim.
Of some concern is just how the market is brutally punishing those that disappoint on earnings, while at the same time, not showing too much love for the ones doing better than expected.
I went back to the Marathon Oil well this week after closing out another position last week.
This time around, if faced with assignment of the short puts position, I will likely elect to take the shares, as Marathon Oil reports earnings next week and is also ex-dividend.
I don’t know what to expect next week, but I’m prepared for the pickings to get even more slim, as any meaningful increase in the price of Marathon Oil may close its lure as a serial play, as it was through much of 2016 and the early months of 2017.
If the latter camp is right and there is some kind of a meaningful correction ahead, then I will be very happy to have had so much diverted to cash.
For now, though, while I have one foot by the door, I also have a finger on the buy button.
One of those appendages has to be right.
For now, I feel as if I’m living the best of all worlds, as cash approaches 20% and my positions continue to outpace the S&P 500.
So far, not nearly as much as they did in 2016, but anything above and beyond the index is a bonus.