Wednesday, August 11, 2010

$Cash - Continue to Recommend Cash

Since the start of the rally it has been hard to get bullish even though there was evidence of a possible start of a tradeable rally or even a bull market.  But the entire time, my model refused to go to a buy signal.  Generally that has meant that unless you are really nimble, you're best position is in cash.

The market continues its main theme, following the Euro/Yen conversion.  As long as we stay correlated to the Euro/Yen we cannot expect the market to have its own mind.

Today's action is very worrisome.  Not because it is a big down day on heavy volume, but because the market cannot keep up with the mini bounces in the Euro/Yen conversion.  The last time we saw this action the market made new lows.  So the market and the Euro/Yen conversion are now at even more critical levels then before.  If  today's or this week's  lows cannot hold over the next week, we will most likely test the year's lows at a minimum.

Stay in cash and be patient.
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