9800 Top Target Reached - Time to Rest - Sell into Strength

In my last post I suggested that the Dow could reach as high as 9,800. I expected to possibly reach that level by late August. Instead, the Dow reached that target in September, the seasonally weakest month of the year. Now we are in the dreaded seasonally weak month of October and the market is finally starting to act tired.
I still expect the market to do bigger and better things before the year end, but would not chase any stocks at this point in time. I would rather wait for some healthy consolidations and pullbacks to occur before dipping my toes in the pool again. There are many great stocks whose performance has not been affected by the economy. I suggest building a list of champions and waiting for the right time to buy them.

There is no question that the market has had a spectacular percentage bounce back from the lows. However, throughout history the market always has had spectacular bounce backs from the lows.

Since 1900, every time that the market has had a heart attack it has rallied back to its old highs - with the one great exception being the great depression of the 1930s. Sometimes the stock market has rallied to its old highs only to be repelled back down such as was the case from 1966 to 1982. Other times it has taken a while to get back to its old highs such as was the case after the 1987 crash. So which time is now?

I doubt that the stock market averages will get back to their all time highs very soon. Although there is plenty of monetary & fiscal stimulus in the system, it is going to take some time to get the economy back to health.

My gut tells me that the stock market is probably in one of those red periods as represented in the above long term stock market chart. But that does not mean that the party is over.

There are plenty of great stocks that are at or above their all time highs. Champs like AAPL, BIDU, CERN, NFLX, NTES, and PCLN are right there. I would pick my spots to buy stocks like these only after the market consolidates and starts to run again.

The easy money has been made. Now its time to pick great stocks like these and time one's purchase. There is no rush to jump in. Can the market go a little higher, before it pauses? You bet. But why play Russion roulette with Dow 10,000 at this point unless you are an in and out trader? It's time to sell into strength.