Take some profits please

Posted by admin on November 9, 2009

Anyone who has money invested 401-K please re-balance your portfolio now.  Please, for your peace of mind, remember where you were at 1 year ago.  Take some profits and have some cash ready, because I believe that we are getting ready to top out.

Oh sure everyone is on board with the rally, but seriously is anyone paying attention to the economy?  Look at the chart below of the S&P 500.  It ran down below the 50 day moving average and has bounced back up, but look at the divergence between the price and the MACD over the last two months.  The rate of growth has slowed.  Also look at the volume on the most recent up move volume has been declining on the last two upswings and volume has increased when the market has pulled back.

The G20 came out today an in effect told everyone to go ahead and keep shorting the dollar, but this trade is so crowded right now I wouldn’t put on a new long with your money.  The Fed is supposed to stop buying treasuries soon and I have a feeling if they don’t keep buying treasuries, rates will start to climb, the dollar will bottom, and you can kiss this rally good bye.  I am not saying to short the market, but I am going to take some profits, increase my cash, and tighten my stops.  If we close over 1100 on the S&P we will have a new breakout and we could be off to the races.

Check out Which Crisis Will It Be? by Graham Summers.  He shows a lot of data that supports a reversal also.

Please be sure and read the disclosure.  This is not meant to be investment advice.  Please consult your financial advisor before making any investment decisions.