As mid-term traders (as opposed to long-term) we want to consistently make money whenever the financial markets give us the opportunity to buy near the lows and to sell near the highs. It is called “How to make the greatest percentage return with the least possible amount of risk.” Our goal is not to catch the very top of the market or the very bottom, but to consistently make money for our subscribers and our own personal portfolios. We treat both the same.
We’ve had several of our clients asking us why we issued a sell signal at this stage of what appears to be a bull market. And yes, indeed, this market could go much higher. Here is why we decided to sell now and take a sure profit.
On Thursday February 9th, when the news came out that Apple’s price has reached all-time high, the message to the public was that the stock market was stronger than is the reality. Then the Greek bailout agreement occurred. In addition, a separate deal regarding U.S. banks handling foreclosures hit the street. Much to our surprise none of these announcements resulted in a lift to the market.
We have also been tracking the commodity markets because they tend to lead the stock market. However, most of these hard-asset ETFs have been lagging behind the market and forming bearish patterns. During last week all of a sudden the corporate insiders were selling at much higher ratio to buying. Last, but not the least, VIX hit a low level of 16 which indicates complacency on the part of the average investor.
If we can make double-digit profits then it doesn’t matter if we are the most brilliant forecasters of the market. We shall monetize our healthy gains now and wait like a patient old fox for our beloved TLT to drop near 100 by this summer. Then we will start accumulating Long term US treasuries in anticipation of a bear market, which is inevitable.