10-2-2010 Market Indicator Status Update

Both Major Market Timing indicator #1 and #2 remain on “DOWN” – the market has moved sideways for two weeks now.

Why are your indicators still “DOWN” after the large September rally?

New “UP” signals were not triggered when the market moved up.  Now the market is in an area where new “DOWN” signals typically occur.   Entering long positions after a large move up is a low probability (poor) trade, as the market usually pulls back to a lower level.

The market may take another leg up and then drop.

It can be painful to watch the market continue to go higher while we are on the sidelines, but statistically it’s the best approach if the market has already made a significant move up.  The market will always give us a future opportunity to enter (new “UP” signal).  Our primary goal is preserving capital, which sometimes means sitting out during upward moves (but making 2% interest in interest funds while sitting out).

The publishers current positions:

  1. 10% Real Estate Fund (REIT) – Indicator #4 position
  2. 15% International Stock Fund
  3. 75% Cash/Bond Funds