Cautiously Long 1/16/12

No changes.

My system still says long on SPY, the S&P 500. I am long on various stocks such as CAT, F, HOG, PBR, PCP, AMD. In my 401K I am partially long as my monthly system is divided between equity funds and Fidelity Govt Income fund.

I went to the Richland County library in Columbia, SC based on the advice of a friend of mine and looked up various newsletter subscriptions by the Chartist, Richard Russell, IQT etc. Overall the sentiment is quite bearish. The recommendations vary but go as far as to “beg” the subscribers to get out of the markets in one case. Inevitably though, there are variations in recommendations as one would expect. I do find the suggestions useful and found some newsletters more actionable than others. But it is easier for me to use Metastock and my own technical systems to trade these stocks. I think if the markets tank later in the year, I would be in a good position to be out of the markets and take some put positions to make a little on the down side and protect  the rest of my position by being out of the market.. Attached are charts on some of my long positions.

I think that the biggest opportunity to make money this year will be a large up move or two and also a large down move. Down moves usually start in the end of April time frame. This time I want to be fearless and trade both directions knowing that I will never know how long a move will last. I will still only have very modest returns as I do not trade all my portfolio. My wife wants me to get larger returns; but I know with larger returns come the risk of larger drawdowns. I am very conservative and do not want to experience a large loss. …but will head in the right direction, i.e. + up on my portfolio.