We have seen some rather choppy stock market conditions over the last few weeks. As of last week, the market corrected and then today, it has rallied. The reality is that the number of COVID-19 cases are once again rising...we are in the second wave, the US election is on the horizon and quite frankly, the market performance has really been pinned on a small group of companies. So, it may be helpful at this point in time to provide some commentary about the market conditions from our technical analyst, Mr. Bob Dickey:

It may be that the stock market is in a corrective pullback after the uptrend of the past five months, but the relatively high level of bearish sentiment leads us to the opinion that any pullback will not be as deep as some are expecting. Some measures of speculative short positions in the market are at extreme levels that we see from a contrarian point of view as meaning the downside risk could be limited to a correction and not a bear market. On the other hand, many of the large-cap tech names that were leading on the upside have broken their technical trends and are now in pullbacks that we think could affect the indexes in a reverse fashion to how they have boosted the index returns since March. We think a “second chance” to own the big growth stocks could be many months away as these thematic trends tend to take longer to cycle through their bull and bear stages than most would expect. Net-net, these opposing market forces may lead to a market that continues to be volatile, but within a range for the next several months that could frustrate the bulls and bears through year end.

My advice right now is this….you will not be able to outguess the market. No one can. Keep good businesses in your portfolio. Given today’s environment….think about the businesses that are going to prosper and succeed, moving forward. Last March and April, I recommended that you step to the market and pick away to buy things. I know, it was difficult to do. As a portfolio manager, I hit the “buy” button on days that the market was sinking badly and it was hard to do. But that ended up being the right thing. There are lots of businesses that will survive in what seems to be a very difficult economic environments because of the people and the remarkable way that people can adapt and think. Just make sure that you have a “stash of cash” available in your portfolio for buying power so that you can pick away when the market pulls back. These pull backs are opportunities that will help us out later.