From the Desk of Willie Delwiche.
Rules Need Application To Be Useful
Market legend Marty Zweig was known for his investing rules. The first among them addressed the importance of staying in harmony with the underlying trend in the market. Good rules are great guides - we ignore them to our own peril.
Why It Matters: Rules need to be more than trite and convenient sayings. But given that we each have our own temperament and time frames, our individual applications will likely vary. For me, recognizing that the trend is my friend and not fighting the tape means respecting the direction of the long-term trend in the S&P 500 and the advance/decline line based on net new highs for the NYSE + NASDAQ. All of the net gains for the S&P 500 over the past two decades have come when at least one of those is rising. Right now, as has been the case almost continuously since February, they are both falling. That is not a tape I want to fight.
