The model portfolio is now 11.25% in stock ETFs, double-short so the effect is 22.5%.
1.5% is allocated to short silver via ZSL (3% actual due to double-short).
U.S. Stock Market
I will wait for support being broken to increase exposure to 20-25%, depending on market behavior. The initial target and profit-taking for half of the short stock position will be at the close 3/19.
The current I1 chart:
I1 longer-term forecast is for March 2010 through the 1st half 2015 to be a bear market. I1 from 5/2010 through 5/2015 will contain only 7.25 months with I1>4, averaging 1.43 months per year. I1=4 is considered a balance point and historically the market averages 7 months per year >4.
Currently the rest of the world has started removing monetary stimulus. Upward pressure on government bond rates around the world will likewise pressure world stock markets. In the U.S. various factors are pressuring long rates higher through April. Amongst them:
a)the fiasco of state governments' finances (2011 will see $142 B state deficits that will need to be plugged up with new bond sales),
b)Fed removing auction facilities, discount rate hike causing some treasury selling at major banks and cutting profits somewhat (money is only next-to-free, not free),
c)the continuing wariness of trading partners to increase U.S. bond exposure in line with U.S. bond issuance. Total foreign holdings up a paltry 17 B in December to 3689 B. Central bank holdings declined 30 B. This while treasury auctions are skyrocketing.
Long rates matter!
2010 Forecast:
Please read the 2010 Forecast for precise turn dates and the strategy employed to utilize them in my trading.
2010 Forecast
The Nasdaq Composite count:
The high in January at 2326 was revisited Friday and coincided with the I1 peak at the close. This reinforces the conviction that, even if Monday should open higher, it will immediately turn down.
Notes on the chart labelling:
My labelling of the waves does not include the appropriate numbers and letters due to the restrictions on the blog editor (and my keyboard). Circled numbers and letters are not possible in this environment. Thus, minor degree waves which should have circled numbers and letters will contain different labelling (m1, m2, ....ma, mb, mc). Wave degrees are on page 27 of Bob Prechters's book "Elliott Wave Principle". For information/training/books on Elliott wave see
Elliott Wave International.Silver
Looking for possibly one more high before the rally exhausts itself. I will allocate the other half position (1.5% of capital) either on this final leg or break of support currently at May silver 17.08.
Silver wave counts
You almost had me hooked until you started talking about shorting silver. There are one million stocks, commodities, currencies and ETFs to short in the naked city, and you pick on silver! Silver is inextricably linked to gold, and so you are in effect betting against gold in a market crash. I do not think this is the best available bet -- and it might be the worst.
ReplyDeleteStand by my silver short unless May futures exceeds 17.70. This is close by. a) Silver has rallied from 14.60 to 17.51 in 1 month exactly, that is 20%. b) It is too popular, with 95%+ bulls. c) Silver is an industrial metal, not a monetary metal. If the market sniffs economic weakness then silver will swoon.
ReplyDeleteIf silver does follow the stock market on economic weakness into my target dates 3/30 and 4/29, what then? The monetary distress does not come until later. Then gold will be the play.