The Club has taken a restrained approach to the oversold stock market in recent days, making only one purchase after an assertive buying spree the week prior. In a volatile market, investors’ best course of action sometimes is doing very little, or nothing at all. Our only buy this week came Monday. We scooped up 25 more shares of Pioneer Natural Resources (PXD), at roughly $185 each, after the stock had fallen about 6% from our most recent purchase on March 13. That kicked off what proved to be a busy week for the Club, as we bought eight stocks to capitalize on bank-driven turbulence . Bank worries following the collapse of Silicon Valley Bank (SVB) two weeks ago have not vanished. In fact, fresh concerns arose Friday around the health of German lender Deutsche Bank . But, ultimately, the particulars of this past week — including a Federal Reserve interest rate hike and large market swings — prompted the Club to be more judicious with our cash. This was the case even though our trusted S & P 500 Short Range Oscillator has continued to signal an oversold market, which often suggests stocks may be poised for a bounce. Anticipation over the Fed’s Wednesday rate decision hung over Wall Street early in the week. The central bank’s 25-basis-point rate rise was widely expected, but there was no way to know how the market would interpret Fed Chair Jerome Powell’s subsequent remarks. Given that uncertainty, it didn’t make sense to step in and buy stocks until the Fed’s path was clear. Stocks proved tricky to read Wednesday, rising to session highs early during Powell’s press conference, before turning lower and selling off sharply. The S & P 500 fell 1.65% Wednesday, a decline partially attributed to Treasury Secretary Janet Yellen saying she hasn’t considered “blanket insurance” for all bank deposits following the failure of three U.S. lenders in March. Yellen appeared to shift her position Thursday , telling Congress that regulators could take additional actions to ensure deposits are safe, if necessary. Markets may remain shaky in the absence of a clear universal deposit guarantee above the Federal Deposit Insurance Corporation’s (FDIC) current $250,000 limit. In volatile stretches, we also like to avoid buying when stocks are up big in a single session. That explains our inaction Thursday as Wall Street ripped higher to start the day . The S & P 500 and Nasdaq Composite traded up as much as 1.8% and 2.5%, respectively, before retreating in the afternoon. The market being in oversold territory isn’t the only requirement for the Club to put money to work in a stock we like. We also want the stock to be at a lower price than our most recent purchase. Take Halliburton (HAL), for example. A week ago, we bought 130 shares, at $30.15 each , following Halliburton’s roughly 13% decline over just a few days. The oilfield services company continues to trade at an attractive level as of Friday, at around $29.50 per share. The problem is that level is too close to our March 17 purchase. Typically, with an out-of-favor stock like Halliburton, we’d feel better stepping in about 5% lower than our last buy . As Jim Cramer says often: Discipline trumps conviction . Bottom line Investors should always consider the full picture when determining whether it’s time to put cash to work. For the Club this week, the facts on the ground suggested we be a bit more cautious. The market’s post-Fed whipsaw, combined with the Yellen wrinkle, partially validated our restrained approach since Monday. Another consideration is that the S & P 500 is on track to finish in the green this week, even though the news flow around banks has tended to skew negative. We’re careful about chasing stocks into strength when there’s so much volatility and uncertainty. (Jim Cramer’s Charitable Trust is long PXD and HAL. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
The Club has taken a restrained approach to the oversold stock market in recent days, making only one purchase after an assertive buying spree the week prior. In a volatile market, investors’ best course of action sometimes is doing very little, or nothing at all.