Sunday, November 6, 2011

Why am I not invested 100%?

At every point in the market, there is this lingering thought that makes you think why you are not invested 100%. There is a time you have to be in cash, there is a time when you have to be invested 100%.

My market signals are positive, in bull mode in all time frames now. We missed the (short term) bear mode on friday by 5 SPX points in the afternoon. Crude oil, Gold, Silver are in bull mode in the short term. In the long term and intermediate term, crude oil is in bear mode.

Dollar index is in bull mode as well in all time frames. When the Dollar index (risk off trade) is in bull mode, I have to be cautious. In addition to this, I am looking at the credit spreads are being widened. I am not following the political drama in the Uropean continents at all. My focus is simply on my technical analysis. I am still long the market, albeit cautiously. I don't believe in hedging because I want to be certain on the market direction. If I am wrong, I am wrong. If I hedge, I don't think I can make any profits when it matters. I reduce my positions when there are cross currents.

I have a 2% stop for the current position. If SPX clears 1257, I will add another 1/3 with 1250 as the stop. If SPX clears the 200 DMA at 1273, I will add another 1/3 with 5 points lower as stop for that size.

Have a great weekend!

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