Monday, July 2, 2012

All cash for now

Sitting in cash for now

First, thanks to all of you for propelling this blog past 1,000 page views!  I'm humbled by the response to this blog in the short amount of time it has been in the public view.  I hope everyone finds it helpful in their trading.. if you find it useful, please pass it on to your friends!

Now, on to business.  You probably noticed I am now keeping two scoreboards.  One for the RumWave and one for the UltraWave.   To review, the RumWave is the less risky of the two, and the UltraWave incorporates short positions.   Today I exited the 3x short position for the UltraWave.  Right now I'm recommending a HOLD status.  While I do think the intermediate term (6 months or so) is likely to be higher, I just don't like the daily scores here.

Today I've posted a larger view of the scores.  You can see how they have progressed since the most recent low on 26 Jun.  Right now, the score colors are decidedly orange and red, so I'm not looking for a big bullish run in the very short term (next few days).  

While I do have concerns about missing a prolonged rally, I also bare in mind that this method is totally crushing most funds.  According to the top managed funds' YTD performance is significantly lower than the RumWave with the best being at 18%, and most of them seem to be in the 4-5% range.  (nearest I can tell this is current as of 4pm  EST).  So, in theory, we could buy an ETF that mirrors the DJIA, take a vacation for the rest of the year and still be crushing it.  Ultimately, I plan on letting the market cool down a bit before jumping back in.  The 4th of July holiday would be a great time to announce some terrible news because most of us will be grilling burgers and hot dogs, not paying attention to the headlines

DJIA 4 hr chart
 The 4 hr chart is showing a bit of weakness here, with the red line on the slow stochastic taking a slight downward slope an the candlesticks starting to take that "twisted ribbon" appearance.  Not a totally bad sign, but showing some consolidation at a minimum.

DJIA Daily Chart
 The daily is also in no-man's land.  There's the big fat candle for today, but the top of that candle is in line with the previous candle's high and also matching with the last level of resistance from 20 Jun.

The bottom line is that we're just going to play it cool here, enjoy the 4th, and let the market come to us.  HAVE A GREAT TUESDAY!!

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