I realize this rally is probably going to 900 on the S&P like everyone is saying but I am out of my 401K at 832. (today’s close)
The way I see it is even if we go all the way to 900 on the S&P that is only 8% higher from here. The downside risk is greater than 8%. Plus because I got 30% of my money in almost at the exact bottom in the 600’s I am up for the year now in my 401K and I want to keep it that way.
I will not be putting my 401K money back into the market until the 50 week moving average crosses the 200 week moving average to the upside which cannot happen for quite some time (probably 10 months at the minimum). No more gambling with the long term money.
I also bought two chunks of FAZ (triple short financials) near the close of the day on Thursday. Financials hit their peak last week and the market has continued higher NOT taking the financial sector along with it. To me this is telling that the financials will lead the way down again when the next downturn comes.
UYG (double long financials) has hit the 3.00 – 3.05 level three different times since March 18th…. On March 18th, March 23rd and again today on March 26th. If UYG can break out and go to 3.10 I am going to use that as my cue to get out of the FAZ and see how high this rally can go. I can see a possible scenario where the market goes higher and UYG does not break out and I also can see a scenario where all hell breaks loose and the momo buyers jump ship, so I will hold the FAZ until the market tells me not to.
With the way this rally has been going I may get taken out of that trade on Friday but I hope to hold on to it longer than that.
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My call is 4 us to go back down to 550-600, sometime later this year. But the risks of owning stocks at these levels is much less than it was b4, even if we do collapse another 40%. Most of my money is in in this range (upper 700s, low 800s), minus my Commodity funds which are substantially underwater right now.
ReplyDeleteSo in summary, I'm not selling my 40% stocks, but I'm not adding to anything here either.
You are up for the year, I am not, yet. Another fine job!
I don't understand what you mean by this: "the risks of owning stocks at these levels is much less than it was b4, even if we do collapse another 40%."
ReplyDeleteThe risks are much less than 600's? Or before like 2008 before?
like 2007-2008 era.
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