The question on the mind of many market timers is whether a market turn will occur on no obvious news flow. The headlines about China and Iran are consistently producing buying dips but now that there isn't any 'negative' headlines to serve as catalysts for buying the dips what will take the market higher?
As I discussed in my opening post, the Wall of Worry, has helped this market to trend higher but it is crumbling now. All the worries have disappeared so what will entice the bulls to keep buying?
With that in mind what we have to watch for is an intraday reversal. So far the opening gap is being sold which is the reverse of the recent action when the gap down opens were bought. If the bulls are unable to push the indices back up over early highs than some increased caution will be necessary.
My approach for dealing with this is to simply tighten stops on my positions and lock in gains quite quickly on any weakness. I'm not concerned about missing out on more upside at this point. I'm more concerned about preserving profits and keeping accounts as close to highs as possible.
Rather than try to time the indices, I prefer to let my individual positions serve as my timing mechanism. The indices are now more vulnerable to some downside as the Wall of Worry disappears and if I'm right then I will raise cash as my individual holdings falter.
I've been a seller so far this morning and have only made a couple minor buys. If you are a contrary thinking it is hard to not feel that the market is near a turning point.