The first trading day of May lived up to its billing as an up day. Additionally, the subsequent week is following history as a patch of seasonal weakness. It’s nice when the market follows history so well.
For the past week, I have written several times about the stock market being tired and overdue for a pullback. That mild bout of weakness is here, but its magnitude depends on which index you view. The Dow Industrials have been the strongest and the NASDAQ 100 has been the weakest.
Given that this appears to be just a little pullback and not a decline of significance, some of our portfolios took small action. For example, one strategy sold all of its NASDAQ 100 and half of its Russell 2000. Another took exposure down by pruning some of the allocation to financials. Our most aggressive ones reduced leverage. All should be prepared to increase exposure sooner than later as that remains the theme until proven otherwise.
If you saw my segment on Yahoo Finance yesterday, you know that I continue to have a tough time finding new stocks to buy in our stock portfolio. We found a few that are cheaper than their peers with good price set ups in the economically sensitive space while continuing to be cautious of technology. Selling has been much easier and we did say goodbye to Google, Microsoft and Netflix and reduced our position in Apple along with a few other sales.
The bottom line is that pullbacks should be used as buying opportunities. I know we have entered that period I discussed in my 2021 Fearless Forecast where I thought a peak would form, but we are not there yet.
