Tempting Tuesday – S&P 2,100 is Still the Line to Watch Ahead of the Fed

Here we go again!  

Back in the summer, EVERYONE said we were going to break out to new highs and the analysts were tripping over themselves to predict a higher goal for the S&P and, after calling for caution since May, I virtually screamed for people to get to cash on July 20th in "Monday Market Manipulation – Everything is Awesome" in which I said:

CASH!!! People! Cash, cash, Cash and more CASH!!! I can only tell you and show you that the conditions we are seeing now – INCLUDING the market-boosting government bailouts – are VERY similar to what happened in 2007/8 leading up to the collapse. That is the limit of my ability. In 2007 and early 2008 I also was "wrong" and the markets went up and I said it was ridiculous and the markets went up and I warned people to go to cash and the markets went up and my only regret was that I didn't do MORE to warn people how dangerous the markets were at the time.

Fortunately, we followed our own advice and cashed in our Member portfolios – getting out at the red line on our Big Chart (+15%) and getting back in at the green line (Must Hold) and THAT is why we have AVERAGE gains of over 100% since last summer – especially as we did it all over again in November!  Our timing could not have been better.  PERHAPS this time is different but I have that same sense of foreboding I had in July but not so imminent that we've gone to all cash – but we do have $120,000 worth of downside hedges in our Short-Term Portfolio and we did tightly cover our Long-Term, Butterfly and Option Opportunity Portfolios (see weekend review).

In fact, we gained about $8,000 (1.3%) in our paired Long and Short-Term Portfolios on yesterday's little dip so I think we're bearish enough there but the OOP lose $2,000 (2%) and the Butterfly Portfolio, God bless it, was flat (it's supposed to be). Portfolio balance is a tricky thing and it's important, when you are worried about market direction – to have a very good idea of how a 1% rise or fall will affect your overall balance.  …
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