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2good2betrue (< 20)

Defining the up coming pull back

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February 10, 2011 – Comments (0) | RELATED TICKERS: FAZ , APKT.DL , NFLX

There is that notion that there are ONLY two things that are certain in life (death and taxes). As for other certainties, there are always "conditions" associated with them - such as, "What goes up must come down!"

I'm feeling a little uncomfortable with my recent cash backed pick of FAZ. Particularly when the market continues its torrent pace and achieving higher highs. Just seeing those other picks I'd love to be in while they continue to climb while my pick falls even further into the red.

However, some of the more absolutely stupid things I've done in the past were always centered around panic. One of the more recent examples is my $31 "all in" pick of BP - I know, ballsee move, but I've never been more sure. Only when the stock dipped to $27, I paniced and abandoned for a nice ugly loss... only to look back just a weeks later and see BP had recovered as expected to 40+ which would have been so SWEET!

Its been my experience that I'm very often right when it comes to my picks, but occasionally my timing sucks. My gut says we are way, way over bought here and fellow fools seem to concur - evident from the mass exodus of 90+ players from the underperform stance on FAZ. But the price keeps going lower, which is forcing me to continually reflect on my actions by saying to myself am I just be absolutely wrong here or does my timing just suck... We'll, I'm only down a buck and guess I'd rather just be in that situation than buying NFLX or APKT at at all time high prices.

My gut also tells me, with each new high the market achieves from here, it will represent an even greater volatility in the future - meaning "when" the pullback happens it won't just happen gradually, but rather increasingly rapid and without provocation. So, all those pigs buying 52 week high stocks, aren't just going to get killed but its going to be bloody. So, being $1 down on a stock near its 52 week low (with huge upside in a pullback) seems a lot less risky than buying already overpriced stocks.

Hate to say this, but my near term prospects may rely on the Chinese and their inflation fighting measures. Clearly this is having a ripple effect on the US economy outlook.  

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