Sell

The Dow Industrials closed right near the 10,950 mark we have talked about several times in the last month.  If, and we don’t think it will, but if the Dow can make a meaningful advance above here, then there could be some additional move left in the Dow.  We don’t think that there is much left here due to the extreme buying we saw last week.  Taken together with the fact that most of the momentum indicators are overbought, these signals are too loud to ignore.

Last week we talked about media suggesting the market was “hoping” for a weak employment number so the Fed would back off on their interest rate hikes.  Well, Friday’s jobs report showed a lower than expected 108K jobs created in December as opposed to the expected amount of 220K or so.  Let’s not forget that the numbers included a bump to the November numbers of 90K which could be taken together with the 108K to come close to 200K, but that is too logical.  The market decided to go on a major tear, especially in the NASDAQ.  Oh, and before I forget, why is this economic expansion only creating about 200K jobs a month, this is very weak?

I received an email about an article related to the Chinese possibly switching its reserves Away from the Dollar.  (Thanks EC)  These are rocky times for the dollar after its stunning run up that took it up to 92 into the end of November last year.  The dollar was not too happy with the notion that the Fed might be near an end in its interest rate hikes and has dropped from that 92 in November to below 89 last week.  The Chinese suggesting they want to move some of their reserves to something else, like gold or possibly the Euro, may deal a significant blow to the dollar.  You may ask “What’s the big deal?” and I would tell you that the Big Deal is that Real interest rates, long term interest rate, those not controlled by the Fed, would go up.  We are waiting for this to happen (preferably after we get out of our TLT’s).

In the short run, we are going to sell into this strength starting Monday.  We are going to go out of cash and into shorts as we think this rally is nearly over.  We normally would not recommend this to our readers and we don’t recommend that now.  [If you so choose, we would suggest buying the RYAIX, which is a 1 times inverse fund of the NASDAQ 100.  We have been in the RYVNX (yes I know) which is a 2 times inverse fund of the NASDAQ 100, a little more speculative than the 1 times fund.]  But, we do suggest selling some of your long positions.  You probably have pretty good prices in your stocks and now would be a good time to consider getting out.

Be careful and Be selling.  CASH IS KING again.

Dow Industrials:  10,959.31  +77.16
RYVNX:  17.44  (ouch but a good buy and we will buy)
RYAIX:  21.18
TLT:  91.72
BEGBX:  13.42  (as this goes up, the dollar has gone down)