Wishing Wealth: GMI: 0; GMI-R: 0; 1,453 new lows; safely in cash-- and patient

Wishing Wealth: GMI: 0; GMI-R: 0; 1,453 new lows; safely in cash-- and patient

"When I began this blog in 2005 I wrote that I was a chicken and had successfully avoided all significant market declines since 1995. It appears that my indicators have kept me out again. While I do not make recommendations on this blog I did tell you when I went to cash in my pension plan and in my trading IRA. I hope that many of you looked at my indicators and also took actions to protect your funds. The market signaled this decline weeks ago and if we heeded its warnings and ignored most of the "stay invested" media pundits it was possible to emerge unscathed.

The market will signal a bottom at some point and it is critical to concentrate on its behavior. The trick is to wait for the turn and to wade in slowly. Anticipating bottoms is a fruitless exercise. I am very willing to miss quick short-term bounces and to wait for the signs of a real change in trend. When the GMI returns to 3 or 4 and the QQQQ is in an up-trend there will be ample time for me to profit from the rise. In 2003 after the bear market my account gained over 50% in the market rise, without margin (not allowed in an IRA) or the use of options. I have learned over the past 40 years that the secret of success is to be in the market (on the long side) only when the market is in a confirmed up-trend. So I will remain in cash now and monitor the IBD100 stocks for possible future leaders. (See yesterday's post.) As Jesse Livermore once said, the most money is made in the sitting, not in the trading....."

Wednesday, January 23, 2008