So far I am making no changes in my plan which has been in place now several months. Very slowly and selectively I am selling highly appreciated stock funds on good strength days and holding short hedges. With that strategy, raising cash (now to 39%), and with modest metals and energy longs, total account values are rising nearly every day. But the risk is declining. Even with these large cash balances (earning 4.1% at Vanguard Prime Money Market), we are up 2% on the year, which is nothing for gunslingers but great peace of mind and decent cash flows for retired gunslingers.
There are two timelines in play, both shown on the chart in the black oval: one was for Friday or early Monday, the other for Thursday February 2, also known as "Groundhogs Day". The first line cross is so close to the low of last Thursday that it might be a late buy.
Click on image for larger view.
This is an exciting position since I am at a riskless edge but with lots of cash for buying if I find I am wrong. My best guess still is that we go down into the 23rd of February's 77 week low. Sentiment as I measure it maintains its downward pressure. Loekke's work and my own attempts at "reverse engineering" suggest a low in February and a secondary rise into spring or even early summer.
I am trying very hard to resist the urge to buy something that is outperforming, but everything I see looks overvalued or vulnerable except dollar cash. In the long run gold, silver, and stocks are excellent. I can't see the current situation lasting very long.
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