I don't trust this market. It's gone up too much, too fast, and a few stocks have the lion's share of the gains.

Look at some of the big gains this week. Amgen was up 13 3/16 @ 127 13/16. Cisco was up 8 3/4 @ 111 9/16. Intel was up 12 1/16 @ 140 15/16. Lucent was up 9 1/4 @ 112 9/16. Medtronics was up 11 13/16 @ 79 11/16. Microsoft was up 18 3/4 @ 175. Pfizer was up 12 7/8 @ 128 5/8. Qualcomm was up 6 13/16 @ 65 13/16. SanDisk was up 4 7/8 @ 28 7/8. And Sun Microsystems was up 13 3/4 @ 111 3/4.

These kinds of price increases for 1 week border on being shocking. They must also be viewed in the context of the advance/decline ratio today, when both the Nasdaq and S&P 500 closed at record highs. The Dow Industrials' ratio was 1679/1331, and the Nasdaq's was 2266/1724. I mean that's O.K., but it's nothing compared to the strength in the favored few.

That said, what does it mean to me? I'm glad you asked. To me, it means that the market is ripe for a bout of profit taking at the very least. On Monday, February 1, I will sell all of my "trading" stocks in which I have a profit, at the first sign of market weakness. I will continue to hold my electric utilities and "investment" stocks, which I call my stocks for life. I always recommend against market timing the latter issues, as it is too tough, even for the pro's.

Sure, I might be too conservative, but I don't think so. I'm certainly not recommending selling short, selling naked calls, or buying puts; that's too aggressive, and you never know when these big increases will end. But at least you can take some chips off the table, and you will have meaningful buying power whenever that inevitable set-back comes. Maybe cash isn't king yet, but it's at least a prince. Stay tuned.

The Market Pro - January 29, 1999