Why I Went to Cash

Even though I essentially moved to cash today I’m still bullish overall on the state of the markets. I opted to close out my ETF’s and take all of the profits after scaling out yesterday when I noticed we are closing in on the June highs. My thinking is that we have more downside risk (200-350 points indicated be green box below) vs upside risk (50 points).

I think the market needs a good scare and maybe that comes in the form of a down day + big gap down the following day, or maybe we have 3/4 down days where all the bears come out of the woodwork to proclaim Dow 6000. Who really knows, but I prefer the former. Even a couple boring days would be suffice to work off some of this overbought condition and allow this move to continue.

What I do know is that my system is bullish but I’m not going to fail to take the easy profits that the market has given me over the last 7 trading days. If we continue to rise more stocks will show up on my scans and I’ll get long those. If we pullback it will give me an opportunity to pick up some of the stocks I mention below as long as my overall market timing system stays bullish. Win-Win in my book.

I’m currently long INFA as it’s showed up on my scans and I bought it since we’re in bull mode. I  bailed on my NFLX trade with a 2% gain as I decided I needed more info on a particular strategy I’m working on when buying significant pullback on daily. All of the other stocks I’m watching haven’t had sufficient pullbacks to enter: ARMH ARNA CAVM INFA MNTA SWKS    Many of these stocks take off from the gate and never present a decent entry, ie, MNTA.

One other chart to consider is GLD. It’s approaching it’s 200ma and there seems to be a lot of bearish sentiment with gold right now. I don’t really care for GDX or the miners, but GLD is catching my eye and if the chart shapes up I’ll be a buyer.

What are all of you doing? Long, short, or in the frustrating position of cash?