Sunday, August 17, 2014

For Now Cash Is King

SGS Market Timer Status:   NEUTRAL 
as of close of 8/1/2014

RTS Long Term Current and Past Portfolios
In Cash 

Bull Case:
  From its all time high, SPX corrected 4.3% (1991 to 1905) in the recent sell off.  As of high of last Friday, SPX has regained 3.1% of that 4.3% correction.  That's a 72% retracement which is higher than a typical bear market initial retracement (around 62%) and hence chances of SPX continuing its rally to another all time high and possibly beyond is good.

Bear Case: 
From the low of recent sell off SPX has recovered 72% of its loss and NDX has recovered almost 100% of its loss while small caps represented by RUT has recovered only 36% of its loss.   Clearly a top is being formed as dumb money is piling  into large caps and momentum stocks.   Once dumb money is all in, Big Money will pull the rug from under dumb money's feet.

Times like this, it's best to stay in cash until Market makes up its mind.

Disclaimer: The views expressed are provided for information purposes only and should not be construed in any way as investment advice or recommendation.  Furthermore, the opinions expressed may change without notice.