2 years ago, rabbits ate every single one of my tomatoes before they could ripen. Last year I lost all my tomatoes to a beetle infestation. This year, my vegetable garden thrives. The cherry tomatoes have already yielded many succulent red tomatoes. Hence, for the first time, I can observe how in the proper conditions, unobstructed tomatoes actually grow.
In clusters, on a vine, ripening at different times.
The Russell 2000, now 10 days in consolidation, has the tightest trading range (around 1.36%) since December 2012 and December 2010. If we liken this to a clustering vine, barring some obstruction, we can surmise that additional ripened fruit for the picking is only a few days away.
This current trading range or price cluster if you will, has already given us matured fruit. After all, the Dow has rallied four weeks in a row. The S&P 500 (and the Dow) went to new all-time highs.
Even so, besides the Russell’s, the SPY DIA and more recently Nasdaq all have tight trading ranges.
It is during peak growing season we must make choices. Do we assume everything will be fine and let the positions ripen further or do we pluck the ones that have partially ripened just in case?
If our choice is the former, it is partly because we feel we have some control over creating a good growing environment. Each day, we carefully inspect each index, sector and individual stocks to make certain that none have experienced a nasty encounter with any rodents or insects. If they haven’t, we move up stops and patiently wait for the market to continue to ripen and feed us.
If we make the latter decision it is partly because we see a shift in the growing environment. That might look like bad earnings, geo-political events, a sudden shift in central bank policy or just general uncertainty creeping back in.
With the latter, we can opt to run with our semi-matured profits and at least get some satisfaction from the fruits of our labor. Even so, when the market trades in a range as tight as the current one’s, risk remains.
