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In short follow up from Feb 29th, the estimation was that a print of ~129-128.5 on the SPY would begin to set up our first potential long entry at green B1. A 50% long entry was considered at that level using our Rydex EOD system. This was our less desirable long entry location, thus the lower position size of 50%.
Today Fri. 3/7 that allocation was made to the tune of 60% long in the indices basket. I didn’t like the price action into the close although as I mentioned we use 80% system rule based with 20% discretion. Discipline over rides all others. If this allocation turns out to be pre-mature, as is very possible we are well reserved for the green B2 level as previously mentioned for a potential100%-200% long allocation. I don’t like buying into a bear market that shows a proclivity to grind continually lower without seeing more of the over abused term of “capitulation” being spewed from the media, although that is what we must do when managing money and risk, which is take into consideration not just the known variables but especially the unknown variables. At this point I would also like to make a hedge / spread suggestion for consideration for those whom #1. are concerned about preserving the purchase integrity value of your dollars and #2. Make some money without as much risk as would a straight out directional position require. The first is a commodity spread going long silver and short gold. This spread would help preserve the value of your dollars from the malignant devaluation that is occurring presently at such an alarming rate. You can accomplish by going long 100 shares of the ETF, SLV and short 200 shares of the GLD. The chart below indicates what that spread currently looks like.
At the present moment the spread has just popped excessively and any one considering it should wait for proper entry criteria which may take a few days at least, but the proper percentage/price re-phasing is the key element for successful location. The second spread is going long the EEM short the FXI
Just as the SLV/GLD spread previously mentioned has excessively “popped” just recently, so had this spread when it reversed course back in November, then settled down in December to begin its new path. This Long EEM short FXI is a “calmer” spread to presently enter and as its trend is more firmly established. Entry on this is less critical but as always risk management in any investment is mandatory inasmuch that there are no free lunches and any spread can unwind abruptly and suddenly. There are several other ways to accomplish these spreads, so feel free to contact me with any questions
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