Mousetrap 1/24/2012 -- likely top forming
Secular Hold IAU & XLF 12.55%
Condition Bear Market Rally
S&P Target 1020
Hedge XLU -0.83%
Position Date Return Days Call
SE 6/27/2011 19.01% 211 Hold
CLH 7/6/2011 22.67% 202 Hold
GCI 7/14/2011 13.23% 194 Hold
CSGS 10/3/2011 25.93% 113 Hold
NLY 10/25/2011 0.24% 91 Hold
DD 10/27/2011 2.17% 89 Hold
KBR 10/27/2011 8.75% 89 Hold
VG 10/27/2011 -32.08% 89 Buy
TTM 11/30/2011 30.11% 55 Hold
BT 1/4/2012 4.56% 20 Hold
S&P Annualized -3.49%
Mousetrap Annualized 16.18%
Hedged Annualized 14.91%
Secular Annualized 19.26%
Now that all optional versions of the Mousetrap (Long-only stocks / Hedged / or two Secular ETFs) are beating the S&P at a 20% annual rate, the money flow configuration has begun to favor bearish sectors over bullish ones.
It is likely that we are reaching the end of the Bear Market Rally.
Keep in mind that most global markets are in sharp decline. For European investors the asset classes are particularly problematic. With European indexes declining and bond yields on the verge of rising, one would normally consider cash as an option.
But if your currency is the EURO, cash is not a sure haven.
Hence, the United States rallies in bonds, stocks, AND the dollar. That’s European panic driven.
But we are not truly decoupled from Europe. The rally has been fun, but it cannot continue forever. And, though it may go up even from here, I believe that there is now greater risk in long positions than in short ones.
While my model core investments remain unchanged, I will take profits on some discretionary trades not listed here.
Tim
