Sideways Markets Require Patience

This has to be one of the most boring markets, over the past few weeks, that I have dealt with in quite some time. The sideways action continues day after day, and while we do still see some descent intra-day moves, over the course of a week, we just find ourselves back where we started. There is somewhat of a downward bias of late, but I’d really like to see the markets run a little further before initiating any new short positions. We’re looking for a definitive move in any either direction, and we just haven’t got it yet. Perhaps today will be better.

By the way, in a follow up to yesterday’s article about which industries and stocks were showing considerable strength of late, another one worth adding would be Education/Training Services in the way of Apollo Group (APOL), ITT Educational Services (ESI), and Corinthian Colleges (COCO). These three stocks have shown considerable growth of late, but I have to say, I’m not a big fan of them; they’ve shown the ability to turn on you immediately and without cause, and honestly, I believe their momentum is likely to soon come to an end. Our experience with this industry in the past has always been to the short-side, and while we have done considerably well shorting APOL, we don’t have any positions in any of these stocks currently.

I would use caution with this industry as it has the tendency to be a bit flakey (forgive me for not giving more quantifiable details, I’m just providing you with my personal experience), and if you are to jump in on the long-side, be rigid with the stop-loss and book gains along the way.