SPY remains exit on long positions 3/19/11

The SPY ETF long exit signal that came on 2/23/11 and posted that day on my blog remains unchanged. The markets and the world have certainly seen huge unexpected events. The earthquake and Tsunami in Japan and the 4 nuclear reactors that remain on the edge of meltdown. Unrest in Libya and more recently the decision by the UN to impose a no-fly zone over Libya. Yet the market behavior when you step back and look at the daily chart on SPY has been surprisingly predictable.  There has been a rise in volatility for sure.

There are many market pundits predicting either an upside or a downside. I am sure they will both be right, given enough time. But what is the use of such advice unless you can actually use it to time the markets either in the near term or the longer term?

I am a conservative investor and I use separate systems and separate time frames to diversify my portfolio. For now, I remain in reduced long stock mutual positions in my 401K that are hedged with SPY put options. That still keeps me slightly long biased I will admit but with limited exposure. I reckon that is a personal decision based on SPY still comfortably above its 200 day exponential moving average and also biased long, despite the exit signal. If the market slowly twisted and turned and remained down, my slower 401K system would switch me into bond funds anyway and the SPY puts would then be used to generate a little upside, or at least offset past losses to keep me flat.

No one can predict the distant future. For today I can say I see the weakness has grown. I cannot say how long the weakness will last. Chances are it will not even get as low as the 200 day ema, and then move back upwards; but predictions are not my business. All I see is the exit signal on the long for now.