The keys to market success as finding good entry points and leaving emotions out of the decision-making process, argues Real Money Columnist James “Rev Shark” Deporre.
“Markets as strong as this one confound the bears -- but they also are very difficult for bulls that are trying to put cash to work,” Deporre wrote recently on Real Money.
The specific problem? While disciplined trading should have most market participants holding a fairly high level of cash at this point, when momentum is this strong, there’s an overwhelming desire to find a place to direct cash on the sidelines.
That’s why finding good entry points and not letting emotions drive decision-making is the primary challenge right now.
“This V-shaped move won't last forever, but it is very difficult not to want to participate when news flow about Ukraine sounds promising, and stocks are still well off their highs,” Rev Shark noted. “Even with this recent runup, there are only about 180 stocks hitting new 12-month highs, so in that context, this is not a market that is widely extended.”
Rev Shark’s putting his cash to work slowly - at least until the trading charts improve.
“Two names that I've added are Digital Turbine (APPS), which provides mobile software used by social media for advertising, and LianBio LIAN, which is a very small biotechnology company that is more than 50% owned by the biotechnology Fund, Perceptive Advisors LLC,” he said.
Deporre said these stocks look nothing like the indexes or stocks such as Apple AAPL that have gone straight up.
