Greg Guenthner

May 1st was not a happy day for most investors. Stocks tumbled. The major averages fell a little less than 1%.

But you can find the real damage under the surface…

Small stocks and midcaps feel hard. So did transports. It was an ugly scene.

So what can you do now?

Of course, you can’t buy every single day the market’s up and sell every time it’s in the red. That’ll get you nowhere but broke.

Think practically. You’re not going to top tick the market. That’s not realistic. Instead, you should search for strength. Find out what’s beating the pants off the averages and stick with it.


Right now, the big winners are the companies that make tobacco, toothpaste and toilet paper.

While the broad market retreated yesterday, the tobacco, toothpaste and toilet paper stocks barely budged. Since the beginning of the year, consumer names have destroyed the S&P, climbing nearly 18%. These stocks are rampaging higher because investors don’t know where else to go. They want safety, so they’re bidding the boring stocks up to new heights…

I wouldn’t be surprised to see some choppy market action in the coming weeks. That’s why I think it’s a good idea to lighten up on your spec plays (like I’ve been saying for weeks now). And you can still ride the next wave higher by staying in these big consumer names that are trouncing the averages.

I know the market’s in a weird place right now. Nothing is cut-and-dry. But the trend is intact. You have to allow price to guide your decisions.

Remember, if you sold at the first whiff of potential trouble in the markets (back in February) you would have missed a major move…

Greg Guenthner
for The Daily Reckoning

You May Also Like:

Don’t Get Ahead of Yourself

Greg Guenthner

The stock market has gotten ahead of itself. Stocks are trading way higher than they should relative to the slow pace of the economic recovery. The fundamentals just can’t support these prices at new highs…

Greg Guenthner

Greg Guenthner, CMT, is the managing editor of The Rude Awakening. Greg is a member of the Market Technicians Association and holds the Chartered Market Technician designation.

Recent Articles

How to Invest in a Strong Dollar World

Chris Mayer

Our friend Jim Rickards and founder Addison Wiggin believe the dollar will soon meet its demise. Chris Mayer, on the other hand, thinks the dollar will only get stronger this year and next. We'll let you decide for yourself. In this featured essay Chris lays out his train of thought and a guide for investing in a strong dollar world. Read on...

“How to Get Rich” is Not How You’d Expect

Chris Mayer

The first thing you might notice about the life of Felix Dennis is that he devoured crack cocaine during massive orgies with hookers at his mansion. Yet despite his penchant for sex and blow, he admitted, "making money is the one addiction I cannot shake." And thankfully, he wrote a book about it. Chris Mayer explains...