Selling Strength

Am moving into 'sell strength' mode in my personal accounts. While I believe that there is some value in select large cap stocks, there are just too many negative factors that, in my view, serve as headwinds against higher prices here.

Beyond the myriad macro factors (debt, EU, Mid East, etc), overall metrics suggest conditions of extreme stock market valuation. Couple that with the pending end of QE2 and one has to wonder what will keep stock prices levitating at nosebleed levels.

I have therefore been trying to use price to my advantage to unwind some risk. Sold positions in Intel (INTC) and Merck (MRK) yesterday. On further strength, will likely do same for Johnson & Johnson (JNJ). All of these stocks have had nice 15-20% moves off their spring lows and are trading near the upper end of technical band tags.

Should the price action in Cisco (CSCO) and Microsoft (MSFT) strengthen, I may make some partial sales here as well although I still perceive some value in these names. Currently, however, neither of these stocks can get out of their own way--which may be telling in and of itself.

If commodity prices strengthen, then I will likely lighten up on a number of related ETFs although I plan to retain a core position in the SPDR Gold Trust (GLD).

Hard not to eye the action in the general indexes without wondering whether we're putting in a significant top. First near term confirmation of such in the SPX would be a decisve break of the multi-month uptrend line (1330ish).

positions in CSCO, MSFT, GLD, SPX