It’s best to be heavy (30-50% or more) in cash if you insist on being a market investor. The idea is to have funds available to buy after the market turns around to the upside. Keep your stops tight, it’s better to sell when there’s uncertainty and buy back later when you’re more sure. There are some things to put your money into that will earn you dollars, see below.
As indicated in my 5/20/11 blog my advanced indicators said the market is going to go down; they started flagging me on 5/8/11. The only thing I’m waiting for, which the moving averages indicators will pick up when the market goes down further, is the intermediate trend change which could be less than a month. The short-term trend moving average showed a sell signal on 5/16.
Contrary to what I said in my 5/20/11 blog the US dollar will still be going down, so you can be short this now. I thought the dollar would get stronger with the market sell off, but we only had a little blip. Usually people put their money in US$ when the market goes down, but they’re putting in gold and silver instead, so these are a good buys. People were putting money into bonds for a while, but that looks like it may be stopping. It will be time to go short bonds soon and I’ll let you know when the timing is right. I was invested in IEF (7-10 yr bonds) for the short-term and got out of them today for a small profit.
If you’re not buying silver to take delivery on at least you should be buying SLV or SIVR. I don’t trust these to have the backing so please have caution and watch them closely. Gold actually appears stronger on the charts, this is because silver had such a strong run up that a sell off is healthy for it.
I think the Euro will have some major problems in the future and I am dabbling in some puts. This is gambling, but a little gambling won’t hurt.
Happy investing or gambling.
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