Weekly Update 06/14/2010:

Last week I spent a little bit of time trying to “map out” a forecast of what I would be expecting the market to do over the next several months.  As I was studying charts last week, it occurred to me that the time frame from November 15, 2007 to March of 2009 is a pretty clear picture of what my expectations are for the trajectory of the market moving forward from now into the mid to end of 2011.  There are a tremendous amount of similarities in most all of our technical indicators from that point in time as we are seeing now.  Taking a “snapshot” of the technical indicators as of November 15^th 2007 is almost an exact “overlay” of our technical indicator picture from last Friday.  From November 15, 2007 to March of 2009 the Dow went from 13,000 having fallen from an “all time high” of 14,000 just the previous month to 6,469 in March of 2009.  That’s a 50% drop in a little over 15 months time.  Similarly the S&P500 starting from November 15^th, 2007 at 1492, having fallen from a high of 1576 just the month previously in October to 666 on March 6^th of 2009, which is well over a 50%, drop in value as well.  Since the most recent top of April 23^rd 2010, technically there are extremely high probabilities that we have now started down that same path.  At this point, only a rally above the recent April 26th highs of 1219 in the S&P500 would change or more likely only delay this view.

So here’s the point; if you or any of your friends, relatives, clients, work associates are still “entrapped” in the “delusional” expectations of a “Buy and Hold” investment mentality where their ONLY HOPE of trying to rebuild an already devastated portfolio is a “one-directional” bet on the market  hoping for it to go UP….PLEASE give them some warning.  At the very least, they need to step aside to CASH.  Here’s a link to an even “sterner” warning almost like a “Paul Revere” type of warning from Richard Russell, the author of the closely-watched Dow Theory Letters issued recently where he warns of a coming “major crash” and to “batten down the hatches”…read more at: http://www.cnbc.com/id/37228003

However, with our Core-Plus™ strategy, we can do better than “batten down the hatches”, instead we can “put out the sails” of our “inverse funds” and enjoy watching our portfolios going UP as the market is going DOWN.  As you may all know, a sailboat can sail better and faster “against” the wind then it can with it.  So I say, be “proactive”…make “Lemonade out of Lemons” and enjoy “Sailing” along the way regardless of what the market chooses to do.  Be it “Bull” or “Bear”, we don’t Care!  That sounds like more fun and makes more sense then just “batten down the hatches”, don’t you think?

In the shorter term, we have been trying to determine when the first down leg of this longer term downtrend will bottom.  The market has been moving in a trading range with the S&P500 moving back and forth from 1040 to 1105 for the last two weeks.  If it breaks below the bottom of this range, then this first leg down from the April top may have a little further to go; however, if it breaks through the top, then 1040 was most likely the bottom and it may be on its way to a retracement of that first leg down.  In that case, we would be expecting at least a 50 to 60% retracement of this first major down leg taking the S&P500 somewhere in the 1130 to 1150 range before turning down again.  That next move down should be significant, so we definitely want to be in a short position when that move gets underway.  Depending on how fast and from where the retracement of this current down move starts we will try to take advantage of the long side of it if we have a sufficient enough range to satisfy our risk/reward calculations.  So, we will keep you posted, in the mean time we will remain in our SELL position.  Yours for Safe Sailing in Bull and Bear Markets.