Barbara, Its Time to Sell

The following is a fictional interview with Barbara. We are in her office at the end of the day. Las Vegas Boulevard is in the distance.

Barbara: Hi, Wink. Come on in and have a seat.

Wink: Thanks, Barbara. How are things?

Barbara: You know how things are in [insert the city of your choice]. More craziness.

Wink: Same old story, huh?

Barbara: That's right.

Wink: Its time to sell.

Barbara: It is?

Wink: I moved out of the C Fund this morning and into the G Fund (essentially a cash position). I got the top price of the day at the close, 1240.

Barbara: But we just moved into the C Fund. Are you sure?

Wink: Pretty sure. Things are not always what they seem in the marketplace. When the market is performing well and as it should, I don't give it a second thought. I forget about the market. This September, I had totally forgotten about the market until I got that celebratory e-mail from you about our monthly performance. It was the best September in 79 years, remember?

Barbara: Yeah, what would we do without you?

Wink: Well, there's always Joel's rear view mirror. (Just teasing, Joel/smile) Seriously, I have found that when I forget about the market, it is a good sign. It is a sign that the market is behaving as it should. Back in 2001 or maybe 2002 in the heart of the Bear Market, I bought a stock, Paradigm Genetics (PDGM), based solely on technicals. There was a triple positive divergence between the price action and the underlying indicator. (Barbara's eyes glaze over) Anyway, I bought the stock with pure faith that it must work out because of the powerful positive divergence. I completely forgot about PDGM because it had to go up. One year later, my wife opened up a brokerage statement and said to me, "Have you seen this?" I took a look at the statement. PDGM had gone up like 1400%! At that instant, I knew that the character of the market had changed. In fact, those were the first words out of my mouth.

Barbara: You know, Wink, you really have a passion for this stuff.

Wink: Yeah, its how I relax. Well, my point is that I forgot about PDGM because it ran like it should. Livermore, the famous trader, remembered observing stocks and whether he had clocked their performance. Nicholas Darvas talked about forgetting his best performing stocks during his gambling phase. I kept thinking about the S&P 500 Index since December 2. I knew the market was going up but I also knew that institutions were selling into strength, so I didn't want our Club to be left holding the bag. Besides, there are always better opportunities to buy later on.

Barbara: Well, I trust you since I really do not understand the nitty gritty and I should have listened to you back in 2008. I still regret not doing anything.

Wink: You have to remember that institutions sell into strength. We have to do the same. Did you know that the best days to buy tend to be clustered around the end of the month and the first part of the new month? We saw a high on August 9. That was near the first of the month. We saw a high on November 5. That was near the first of the month. And December 2 came in like gang busters. I want to avoid the mid-month slump, if I can. December 15/16 has a reputation for being a difficult time.

But what do you think is the biggest reason why I wanted out?

Barbara: Why?

Wink: I turned on Jim Cramer after the closing bell. The first words out of his mouth were "You ain't seen nothing yet?" LOL! I swear he was looking at me through the tv. Smile. When I heard those words out of Cramer's mouth, I knew it was time to sell and leave the C Fund for now. Let's see how the rest of December shapes up.

Barbara: Ok, Wink.

Wink: Later, Barbara.

Barbara: Later, Wink

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