Monday, August 22, 2011
Livin on a Prayer
A market rally based on hopes of more fed stimulis was doomed to fail and that is exactly what happened today. We floated higher throughout the night opening up nicely today and climbing over 200 pts on the DOW. As per bear market rules, traders sold the pop until we were unchanged on the day. Buyers then stepped in and up we went about 100 pts where we bounced around the rest of the day finally finishing at +37. While I suppose it was a bit of a victory for the bulls that we finished positive, it has to be very discouraging to see that we cannot hold any decent gain. Pinning our hopes on Ben Bernanke at this time seems foolish as well. I wouldn't expect anything major to emerge from Jackson Hole on Friday and if we rally based on hopes of more stimulis or an announcement of stimulis then that rally should probably be sold.
I did nothing with my portfolio today but am looking to scale into some GLD or SLV on a dip which doesn't look like it is coming any time soon. A safer way to catch this wave on gold might be to use the pyramid up momentum strategy buying a little at a time and only if the price is higher than your previous purchase price. That is probably the strategy I will use. Also, I am going to put on a russell 2000 short via RWM. If you are looking for a turn in the market a good place to start would be to watch the small caps. If they start to outperform again, there is your signal. Best wishes
Disclosure: Long NLY