The minor gains in all of the major averages on Tuesday were again accompanied by very strong market internals as twice as many stocks advanced as those that declined. The 1% loss in the Dow Transportation Average went largely unnoticed but may be an early warning of a market pullback.
After posting the best week in over two months, the US markets are overdue for a rest. The action in Asia was mixed, with Japan’s Nikkei closing lower while there were nice gains in both Hong Kong’s Hang Seng and the Shanghai Composite.
The European markets are mostly lower in early trading as the majority have also had impressive gains from the early February lows. The psychological impact of the sharp decline and then the equally sharp rally has made many frustrated with the markets.
Reacting to markets by either selling in fear or buying to avoid being left out is generally a bad idea as it often leaves both investors and traders either without a position or with a position that has too high a risk.
In the first week of February, I was recommending new positions in both the Eurozone and Japanese ETFs that I liked the best. Now that ETFs, like the Vanguard FTSE Europe ETF (VGK), have rallied over 8% from their February lows, and the Japan ETFs have also bounced, is it time to change your strategy?
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