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Mind the Gap!

3/27/2019

   
“mind the gap!”

My friend Brett Guiley, Managing Partner-Vista Investment Partners-IN suggested, “after your trip to London, you might use ‘mind the gap!’ as your next blog title. It shall be.
“Mind the gap”, is a phrase used with the commuter trains in London to bring attention to the irregular spaces between the cars on the train. It also refers to the space between the cars and the dock. Some of the cars do not properly match the docks due to where the docks are located. When they are on a gentle curve, they will not properly align with the straight sides of the train. This creates irregular spaces and potential peril for the passengers.
The government decided to play recordings reminding passengers to “mind the gap” and step with caution. They also have signs reminding patrons to “mind the gap”.
So, how are we going to use this in investing? The market rarely behaves exactly like we think it will. Market rally’s are rarely textbook and irregularities abound. The markets internal barometer, the advance/decline line will ideally confirm new highs in the market. The transportation average usually confirms strong market moves by its leadership. After all, all those goods are being shipped somewhere! In the current market, some of the internal pieces are beginning to stumble or look fatigued.
Last Friday’s stumble also has me concerned. I prefer to see the market finish strong, whether for the day, week, month, or year. I think we are going to have a bit of a stall here in the market, though I still think the secular bull market will continue after this pause. “Mind the gap”, directs us to watch the irregularities and to see if there are tactical changes to be made in the near term. If the irregularities are not resolved in the near-term, expect a deeper correction going into the summer.
If the irregularities are resolved, we will see new all-time highs before the summer doldrums set in. Always remember, “mind the gap”.

Enjoy the day…r2