Quite a few market participants were surprised when the markets didn't even dip this morning following the dramatic news this weekend of widespread rioting and looting. Not only have the indices failed to react but the longer they fail to react the stronger they are becoming.
The market's lack of reaction to negative news and the complacent mood may not seem very rational but it has the perverse impact of drawing even more people into the market. If the market can't sell off on this news then what reason does it have to dip?
For many market players it is just a matter of time before a day of reckoning will occur but as John Maynard Keynes supposedly once said, "The market can remain irrational longer than you can remain solvent". That observation is particularly important when someone is fighting a trend. Trends always seem to last longer and go further than seem reasonable.
My game plan is to not worry about the indices. Trying to call turning points is always difficult and it is feeling even more difficult than usual. I plan on staying focused on individual stocks and letting their action determine my market timing. When the stocks I am holding start to act poorly then I will be more bearish.
A couple biotech stocks that are acting well are Trillium Therapeutics (TRIL) and Myovant Sciences (MYOV) . I have held TRIL for a while, but MYOV is a new position that I plan to add to as it develops.