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Author: putnid Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 20277  
Subject: Trapped Date: 12/6/2012 10:51 PM
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I'm thinking we're all kinda trapped in a difficult Market environment. I'm happiest when there's a clear trend. When the Market has been on an extended bull run, I harvest profits and wait for a downturn. I've gone as far as to bank 50% cash when I've believed the Market has gone giddily exuberant. I cheerfully buy back sold shares when the Market is cratering.

At this point in time, I've absolutely no sense where the Market is headed. The situation is extraordinarily muddled. Eurozome markets are climbing higher, even though unemployment, as a whole, in the Eurozone is ~ 11.7%. Most economic indications point to declines in European economies. Even so, the Euro markets have been faring amazingly well:

http://tinyurl.com/4tslmgo

China? Who knows? Government statistics indicate that an economic upturn is imminent. A whole lotta savvy investors think that's all smoke and mirrors. Japan? Japan remains as inscrutable as always. Brazil, growing but far slower. India? Dysfunctional but growing...dysfunctionally.

Meanwhile, here on home turf, the Market seems trapped in a trading range between the 200-DMA and the 50-DMA. We briefly dipped below the 200-day moving average (and I harvested profits), but bounced back (color me chagrined). Now we're bumping along the 50-day moving average.

http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=0&m...

I've absolutely no idea which way the market will turn. I'd be fully invested if I thought the trend was a strong move higher. I'd have harvested profits aggressively to raise a large cash position if I thought the market would be moving sharply lower. I'm kinda stuck in no-man's land. I'm sitting on 15% cash and simply waiting. I can make a strong case for sharp moves in either direction. If the Congress passes some sorta bill to bypass the "fiscal cliff," I can see the Market snapping sharply higher.

On the other hand, should the dithering/blathering/bloviating continue, I can see the Market heading sharply lower as we approach the recess of this misbegotten Congress.

I don't see a clear direction, but I know the Market will MOVE and will move sharply in one direction or the other. But I'm just kinda stuck in place, sitting on 15% cash and not knowing if I should be accumulating more or investing it all.
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