The celebration of a dovish Fed continues here on Thursday morning. Bonds, equities and precious metals are trading higher while the dollar comes under severe pressure.
The gap-up is an invitation to take some profits, but so far it is being well-digested. I've been a net seller so far primarily as a function of discipline, but I'm looking hard for new buys as things calm down.
The thing I want to see following a big macro move on something like the Fed is a shift to individual stock picking. In a healthy market there will be more focus on finding the individual stocks that may produce relative outperformance rather than just trying to catch an index trade.
It is very easy to underestimate the power of momentum in the environment we have right now. There is a tendency for us poor humans to think about what is "reasonable," which isn't how the market tends to function. This is more about trying to keep pace with the action and not missing out rather than whether a move may be justified.
My game plan is to reduce some positions on big moves such as those by gold miners Kirkland Lake Gold Ltd. (KL) and Agnico Eagle Mines Ltd. (AEM) , which I've been discussing. I'll look to add back shares on pullbacks as the stocks develop again.
I've sold down a few other things as well, but I'm inclined to use trailing stops to protect gains here rather than sell everything into strength.
As the day progresses we should see more individual charts develop and I'll be looking for some entry points Thursday afternoon.
The key here is to watch for charts to develop. If this move is a sustained uptrend, then there will be underlying support fairly fast.