WHERE HAS THE INVESTMENT ADVICE GONE?

Readers have probably noticed that the Author has not provided much investment advice in recent posts. There are reasons.

Until very recently, the equity markets have fluctuated between small rallies and pullbacks, a market condition that is not conducive to the Author’s relative strength-momentum based approach. In this kind of an environment, the Author stays on the sidelines and keeps cash. And lately has bought a bit of gold.

For the Author’s system to work, there must be identifiable trends of some duration. We are now in such a trend. Market indices are tumbling and the Author is short the US markets and has no foreign equity investments.

Additionally, the Author has been extremely busy and has not had the time to keep up with daily trading activities. That will be the situation for the near future.

Currently, the Author holds substantial positions in inverse ETFs. He holds QID, which is doubly inverse to the NASDAQ, and SDS, which is doubly inverse to the S&P 500. So in a falling market, if the NASDAQ falls by one percent, you earn around two percent.

However, on those days when the indices are up, you lose twice the amount by which the index rises.

GOOD FROM BAD.

As of January 18th the Author has a 13.52% return in QID and 12.53% in SDS. Annualized, these returns are a blistering 434% and 402%, respectively. And with today’s free-fall in American equity markets, despite the unusual .75 percent out-of-meeting cut in the Fed overnight rate, these returns are even higher.

DON’T BE CAUGHT LONG IN THIS MARKET. IT COULD GET VERY UGLY.

So for the near term future, stay in cash, and go short. And take gains if you have not already. The Author will advise when the technical indicators reverse.

PATIENCE IS NOT A VIRTUE IN THE MARKETS OF THE DESERT OF THE REAL!