- Market is in process of making NEW HIGH and ignoring some key economic indicators - usually happens during market tops
- Margin Debt is at all time high - always followed by a market crash, happened in 2000 & 2008
- It appears as if situation is getting out of control for FED as 10 year treasury bonds yields are rising fast - Stock market is now addicted to quantitative easing programs as if on drugs
- 1st quarter GDP is revised to mere 1.8% from 2.4% and most certainly 2nd quarter GDP will be revised to downside - this is not good for the economy
- Debt ceiling tug-of-war lies ahead of us and we shall expect same performance from politicians as seen in August 2011 - another chance for rating agencies to downgrade US debt
What does it mean for our Investments?
- 401K/IRA - If invested then stay put but be prepared to exit as soon as we see signs of trouble, if in cash/money market fund then have patience and wait for next opportunity as entering now could prove to be very risky.
- Stocks/ETFs - Take partial gains on open positions as well as have trailing STOP on remaining positions. Only invest in very convincing patterns and DO NOT forget STOP LIMIT. Sometimes staying in cash is a better strategy.
Market appears to continue its uptrend BUT be cautious...