Why I Stay Very Focused on My Individual Stocks

 | Jan 22, 2018 | 2:39 PM EST
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hclp

,

bmrn

It looks like the government shutdown problem will be resolved shortly which may not be a market positive. We no longer will be able to rally each time there are new rumors that a deal may be struck. We have seen repeated rallies on things like the tax bill and the Greek bailouts in the past which makes for a very bullish atmosphere dispute the fact that the market is supposed to dislike uncertainty.

The indices have slowed a little but breadth is still very strong with about 4000 gainers to 2800 decliners. The number of new 12-month highs is over 1100. Biotechnology is the leading group today but there is broad strength and plenty of stocks working well.

I continue to be concerned about how extended the indices are but it is difficult to be too worried when there are so many stock picks that are acting well. It is far too easy to use the indices as an excuse for a more defensive posture.

The great likelihood is that when the indices do correct it will not be a selective pullback. The majority of stocks will fall with the indices and many will be unfairly punished. In there will lie great opportunity but there will be some pain in the interim.

The way I deal with this market is to stay focused on my individual stocks and forego all market timing. When the individual stocks shake me out I become more bearish by default and when I can't find more stocks I want to buy my cash levels grow. I do not need to come up with any grand arguments for a bullish or bearish bias. It happens by default.

As it stands right now my positions and the setups I see are keeping me bullish. It is as simple as that and I suspect I will find some new buys this afternoon. A couple names on my radar right now are Hi-Crush Partners (HCLP) and BioMarin Pharmaceuticals (BMRN) .

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