U.S. Stocks at Record Highs: Time to Sell?

Dark Helmet Mask Up Rick Morranis

Time to cash out?

The S&P 500 finally crossed and stayed above the 2,000 mark to close the week.  It's inevitable that various financial publications are out with the classic headline "time to sell", blah, blah, blah.  So what to do?

If you have made some great gains this year, by all means cash out.  After all, smoke if you got em.  However most of us have not made fantastic gains in 2014. The S&P 500 is only up 8% YTD it's a great run but most of it has been done starting in Q2.  If you sell out now you risk not cashing in on more gains should the bulls keep charging.  On the flipside all the bearish predictions of a 10% correction could come ASAP and wipe out our portfolio.  Damned if you do... damned if you don't scenario.

helmet brooks dark lordPUT DOWN YOUR TOYS

How about this option -- Reduce your individual stock holdings and put that money into a bundled S&P 500 ETF such as the ProShares Ultra S&P500 (ETF) (NYSEARCA:SSO).  Bet on the average not individual names.  Volume (actual number or stocks being traded) has not been crazy that's why its tough to believe the bullish run will keep going.  Just take a look at the TLT, iShares 20+ Year Treasury Bond (TLT) it's up an incredible 17% this year.  Volatility has also cooled and is close to touching the 2014 low (this can be traded using the crazy VXX).  The Dow Jones is only up 3% in 2014, that's it.  The S&P 500 is up 8% which is awesome but it's been a bumpy ride getting to this point.  The Media is just running the story because we finally have a record high in the S&P 500.

Bottom line: Just a few charts to help bring us all back to reality.  A pause if anything is ready to hit the major indexes (S&P 500, Dow Jones, NASDAQ).  Take a five minute break as Dark Helmet suggests.  Take out some insurance for a possible pullback and prepare for at most another 3 to 4% rally in the S&P 500 until Dec (however expect stocks to trade sideways).  That's best case scenario. 

All charts below: