Is It Time to Get Bearish?

Mike Turner |

At this writing, we are about 60% invested. I would prefer to be at least 80% in the market, but according to my Oscillator and Bull/Bear Rating (more on this, below), plus the very negative time-cycle forecasts, this week just looks better to stay on the sidelines.

Quote worth Quoting Again

We consider Christmas as the encounter, the great encounter, the historical encounter, the decisive encounter, between God and mankind. He who has faith knows this truly; let him rejoice."...
Pope Paul VI

The open positions in the portfolio (12 of them) have an average net gain of nearly 3%. Our biggest winner, by far, is Conn, Inc. ($CONN). It is up more than +24% at this writing.

We stopped out of Axiall Corporation ($AXLL) today, which had done nothing but move lower since it was added to the portfolio. I'm glad to see it gone.

With the Fed meeting this week, which puts a little uncertainty in the market, I would rather be a buyer if the market would drop 150 points or more (on the DJIA). So... no new trades this week.

Closing Thoughts...

I know I am beating a dead horse but I continue to believe the approach we should take is to buy into any weakness as long as the world's Central Banks (the USA, Europe, China and Japan) continue to be convinced that the only way to keep their respective economies humming along is to dump massive quantities of money into various financial instruments (primarily, bonds).

This keeps interest rates artificially (and significantly) low. It keeps global bond markets from collapsing. It provides a backstop for the global stock markets. And, as a result, inflation is running wild in the stock market. This is not good for long-term economic growth and stability, but it does wonders for our stock portfolios.

The DJIA is up a whopping +21.29% so far for the year, but the Signal Investor portfolio is doing 60% better, coming in at very healthy +34.27%!

As such and selfishly, we stock market traders are benefiting greatly from the global monetary policy of quantitative easing. I don't believe the rest of the world is benefiting all that much and I am concerned that one of these days, the free ride is going to end and perhaps end badly.

This is why I take a long/short view of the market. As long as we are in a raging bull market, I will be mostly long and bullish. But, when the market does eventually have to function on its own and may cycle into a bearish trend, I will be short the market via long positions in inverse ETFs... at least that is the plan.

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