It would appear that Tuesdays rally high on the S&P at 1335 will now be a marker and the market is now headed erratically lower to the 1230 level over the next two months. As such we will increase our short position in the S&P to 30 percent of equity from the current 10 percent level. Using the same analytic metrics our long gold position will be increased to 30 percent. These changes will give us a balanced long gold / short stocks at a total of 60 percent of equity, 30 percent on each side.
Time frame analysis points to a late September time period for a move towards a sustained stock market rally. If I were guessing, I would say it will be based on Romney pulling ahead in the polls and igniting Republican exuberance.
One other point, our upside objective on the dollar index was 83.38 in our January 2012 Outlook. The market got to 83.14 this week, enough said.