safer harbors

[WickedLou9]

So I decided to exchange out of my international equity fund and into a short term bond fund. I am still up on my initial investment, but it has flirted with going into the red and the markets are way to volatile for me right now. This isn't my retirement or anything, this was a somewhat short term investment that I made last February to see if I could do any better than my ING account. Just getting my feet wet in the investment world so to speak. Depending on how it does at close of market today it will be somewhere around + 4-5% since Feb which isn't terrible. Ing earns 4.5% so if I make atleast that, atleast I didn't lose out. I think I am going to leave it in a safer investment untill the market stablizes. I don't think that we have seen the bottom of the housing market bubble and Japan's economy isn't doing so hot, things just seem to be too turbulent to "let it ride". Rather get out while I am in the black and wait out the storm. Especialy since I am looking short term anyway.

What do you guys think? Anyone else doing anything with investments ?

[WickedLou9]

Here is some market jargon

09/10/2007: Mon END OF DAY COMMENTS




04:27pm...MULTI-DAY DOWNTREND INTACT, PERIPHERAL MARKETS SEND WARNING
Analysis: DAILY ROUNDUP: Major stock indices closed mixed. The stock market extended the MULTI-DAY DOWNTREND in early trading; recovered in the afternoon; and eased back in late trading. Volume fell on the NYSE and NASDAQ Composite. Market internals were bearish: NYSE breadth was 20-13 negative, up/down volume was 2.1-1 negative; NASDAQ Composite breadth was 19-11 negative, up/down volume was 1.4-1 negative.

IMPLICATIONS: As of Monday closes, there is no technical evidence to indicate the MULTI-DAY DOWNTREND has been exhausted. The recoveries from morning lows was encouraging, but the bulls failed to sustain gains into the close. There has not been any clear basing activity to indicate the sellers have been exhausted. Meanwhile, there is still no evidence of professional accumulation (manifest by price gains alongside increased volume) a factor that continues to challenge the staying power of the recovery from August 16th lows.

Peripheral markets continue to sound a warning bell for equities. The 10-year U.S. Treasury note rallied 13/32 to 103-12/32 for a yield of 4.33%. This represents a 20-month low for the yield. Continued price strength in Treasuries, as well as gold, indicates investment capital is still flowing into areas of relative safety, and away from risky arenas including equities. Meanwhile, the dollar/yen recovered from early losses today, suggesting we could see a bounce in the coming days. Nonetheless, the INTERMEDIATE-TERM DOWNTREND from June 22nd is in place and there is no technical evidence to indicate it is near exhaustion.

I am spending more time talking about these markets because intermarket analysis gives us a bearish picture for the economy: lower stock prices; higher bond and gold prices; and dollar weakness. This combination indicates the financical markets are discounting a higher probability of economic recession.

To reiterate from my INTERMEDIATE-TERM OUTLOOK, I believe that in the current environment, maintainence of stock market gains alongside further price strength in U.S. Treasuries and the value of the yen is an impossibility. Treasury price strength reflects growing fears of economic recession; in the case of recession, stocks would likely fall in tandem with bond yields and the federal funds rate target. Investment capital would flow even more into U.S. Treasuries and possibly gold assets as well. Indeed, COMEX front month gold violated Chart Resistance at about 698.00 last week and reached its highest since May 2006; this is a very bullish looking chart. Contributing to this scenario, dollar weakness (as a result of lower Treasury yields and prospects of a lower federal funds rate) would drive the yen's value higher. In turn, this would create pressure to unwind carry trades - selling global equities and other risky assets bought with borrowed yen, and converting the proceeds back into yen so as to repay loans.

I maintain my thesis that the stock market is experiencing a Wave 2 Correction within a five-wave advance from August 16th lows. However, the failure of the Treasury market to stabilize reduces my confidence in this outlook. I would advise against building long positions in equities, with a near-term or intermediate-term time horizon, unless we get some signs that Treasury yields and the dollar/yen are ready to turn higher.