As I consider the market action so far today, the movie 'Marathon Man' comes to mind. In particular, the scene in which a Nazi dentist, played by Laurence Olivier, probes Dustin Hoffman's teeth and keeps asking him 'Is it safe?' seems particularly apt.
It is safe to start putting more money to work?
Recently anyone that has trusted strength to last longer than a day or so has paid a price for their optimism. Even when the news flow seems positive it has been dangerous to believe that the seller might relent for a while.
To add to the difficulty, charts are ugly. As I discussed in my prior post there are a few names that are starting to turn up but almost everything now has several layers of overhead resistance after crashing down the last couple months. The only people that are heavily long at this juncture of the market are those that were heavily long on the way down. They are feeling better after a bounce but typically they have a lot of ground to make up.
We can never know for sure if it is safe but we can employ a high degree of discipline and set stops to protect ourselves. That doesn't help much with a big move overnight but if you don't take some risk you won't generate any return.
I'm itching to put some cash to work but I'm held back by the poor charts. The easiest way to get in trouble is to buy something simply for the sake of buying. That is not a safe approach.
I'll be looking hard in the last hour or so of trading to find some new merchandise. I'm encouraged that the indices are trading near the intraday highs. If we wait too long trying to figure out if it's safe we are going to miss some of the bigger moves.