The Best Offense Is a Strong Defense ... and Lots of Cash
The market looks OK on the surface, but what's happening underneath has put me on the sidelines for now.
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Wednesday is one of those days where the action under the surface is much more than what the indexes are indicating. The S&P 500 is only down 0.25%, and the Dow Jones industrial average is positive, but the Magnificent Seven MAGS names are down 1.7%. There are also pockets of weakness in groups like data centers and biotechnology. The AI theme, in general, is losing traction, and that is reflected in Nvidia NVDA, which suffers a 4.3% hit.
Speculative action remains very slow, with just a dozen names moving up by more than 10%. When there is this little interest in trying to find a hot stock, it is a warning sign that there will be little support for the overall market.
There is some positive news about how Trump may not be as aggressive as has been anticipated with some tariffs, but that doesn’t seem to be a big surprise at this point. There is still hope that Trump will completely relent on tariffs, but that is not at all likely.
This is a tremendously tough market right now, and there is no reason to buy. We have not had a real washout in most areas, but there are some small caps, especially in biotech, that are at multi-year lows. Some tariff hopes have prevented greater downsides, but that looks to be shifting today.
My game plan is to stand aside and keep looking for stocks to add to my shopping list. When we do see a shift to a stock-picking market, there are some great values that should recover very fast.
The best offense in this market is a strong defense. Protect your precious capital so you can plan strong offense when conditions change.
At the time of publication, DePorre had no position in any security mentioned.
