Twice since May 31 the 2CS was unable to make new lows on SPX rally peak closes: 2CS 74 at SPX 1353 on July 7, and 2CS 72 a day after SPX 1345 on July 22. Due to vacation I missed seeing the sentiment "divergence" with the 2CS 59 at SPX 1360 on April and 2CS 63 at SPX 1345 on May 31. Volume indicators also showed weakness into their own July 22 peak.
Two 2CS sentiment divergences at rally highs is almost always a sign of the bear. But the stock indexes are so oversold now, with sentiment in the market and the mood amongst both the public and pundits so gloomy that a relief rally is highly likely back to 1250-1300 resistance. People who only read or look at their accounts on weekends may yet sell early tomorrow, but my guess is that will be it for a while.
The bond rally helped me as investment grade corporates and GNMAs shared Treasury gains. But I was holding TMV (triple short Treasury bond), so much of the bondfund gain was "hedged" away. Treasurys are as overbought as stocks are oversold, so I am holding the TMV, which had a decent move on Friday. Gold has been the saver in all this. Adding it all up for all cash and all investment accounts, I was up year-to-date 5.69% on July 19 just before my last post. On Friday's close I was up 3.19% year to date. That's not too good, but a modest account volatility is the primary goal of all of us who are investing in retirement, regardless of age. The highest close I've had in 2011 was up 7.29% year-to-date on April 29.
I've made almost no changes on this stock decline except to add marginally to gold stock funds ASA and GGGG and gold and silver bullion holder CEF on Thursday and Friday, as precious metals miners and CEF are oversold. In retrospect, buying FAIRX was a mistake as it is down 10%, but it is only 3.1% of assets.
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