You Never Know for Sure….

As we had stated two weeks ago, we wanted to be diversified in our portfolio in what we anticipated as a three week scenario in making a stock market bottom. First I will say that the diversification has worked moderately well so far, the portfolio of both being short stocks and commodities is up 1.5 percent (corrected number) since last Fridays close while the stock market is up 0.6 percent over the same time period. 

The difficult part is what does an investor do from here.  We haven’t made a trade this whole week and are trying to digest a few things: 1) Since 1260 on the S&P was our anticipated summer rally high, what do we do when the market didn’t decline first, we are at the anticapted high now; 2) does what happened this week mean the stock market and dollar are headed higher and gold, bonds, oil, and commodities are heaed lower?  Until we see some clues beyond the knee-jerk moves of this week, we are setting tight.  But check in because you never know when those clues come forward.

Two  closing thoughts.  It is nice to see Bush following Obama’s advice and opening talks with Iran.  Secondly, our market indicator which compares long-term and short-term investor activity showed that even long-term investors started buying rallys yesterday although the short term investors overpowered them 30 to 1.  This is one of the things we are watching for clues to longer-term direction.

7:14 AM CDT