The First quarter was brutal, the S&P 500 was down 10 percent and gold and the AG (grain) commodities were hot. Â At the same time the dollar and interest rates were under pressure as the credit crisis unfolded. The so-called bottom in the stock market is not in, that is probably 3 years away and at much lower levels.Â We should however see a significant trading bounce in the stock market over the next three to six months as the government works on problems and election patterns set up.
We look for gold to settle in to the mid to high 700â€™s during this period and for AG (grain) commodities to sell off.Â The dollar and interest rates should move higher at the same time.
At the moment in the Marketocracy Portfolio we are 45 percent net long in stock positions, 77 percent long and 32 percent short. Â In the first quarter the portfolio returns were a positive 11.2 percent.Â
At the moment an S&P Â trading range of 1325 to 1375 with a pivot point of 1348 should develop.Â We would however, want to stress that this remains a high risk environment where another shoe could drop in the credit crisis and everything could change.Â As such this is not a time for complacency or giddy buying, make the market come to you after this first spurt up to the pivot point.