Here’s another “crash
forecast”. Unfortunately, if you browse
past NTSM blogs, there have been way too many crash forecasts in recent months.
Aiden Forecast newsletter
(last Thursday):
“Increasingly, the similarities to 2008 are
becoming almost eerie. We may be wrong, but the markets are poised for this and
while we don’t know what the trigger will be, it could be almost anything…The
popularity of derivatives has skyrocketed within the financial industry. In the
past 12 years, derivatives have grown 10 times faster than world GDP to the
tune of $200 trillion for U.S. banks, which is three times the world’s GDP!
This is a reckless accident waiting to happen and J.P. Morgan’s $2 billion loss
this month may have been the tip of the iceberg.” The Aiden sister’s newsletter is highly
regarded. NOTE: This prediction is
somewhat open ended since they are not necessarily saying it will happen now,
but rather some time in 2012 or 2013.
Warren Buffet has warned
about derivatives too.
As of May, Fed Ex shipping
is down 9% for international cargo through Memphis. This data doesn’t predict a
crash, but it certainly is more evidence of the slow-down that is underway.
MARKET
The S&P 500 finished UP
1% to 1358. VIX rose 1/3% to 18.38 today, Tuesday.
I am still keeping a
cautious approach to the S&P 500 now.
Technically, I want to see the VIX improve more. VIX is based on Options trading and it
reflects what the Options traders think will happen in the future. The Options boys remain cautious.
I now have a round
trip. I sold at 1358 and the market has
climbed back to 1358. Even if I had a
buy now in the NTSM system (we don’t) I think that I’d only put ½ of my normal
stock allocation back I the market. It’s
one thing for the market to climb a wall of worry – we seem to be climbing a melting
ice-wall with toothpick pitons. In other
words, risk seems very high right now.
While I don’t like being sideways to the market (out when it is going
up, or in when it is going down) I am not yet ready to get back in.
NTSM
The NTSM remained HOLD Tuesday
MY INVESTED POSITION
I reduced my stock
holdings to 30% (0% in stock in the 401k) at S&P 1358 after the SELL signal
on 9 May 2012. (See the page “How to Use the NTSM System” – the link is on the
right side of this page). I cut my stock
position to 15% on 17 May in order to maintain a 10% gain in a
trading/longer-term position I had in the QQQ.
