Today's Market
by Dr Invest

Ho..Hum!  Some are wowed by the rise in the DOW today.  I guess .76% is acceptable. But as in the past we have more speculation that Bernanke will stimulate the market and there will be an immediate climb of 6%, taking us back to this year's high. Before you start believing all this dribble, understand that neither the U.S. economy nor the International Economy is that good. In fact, it is bad!

Spain is only weeks away from bankruptcy, Greece has not resolved the underlying fundamentals that put her into bankruptcy, and Italy is teetering financially. Other than the hopes for a QE-3, there really is nothing more that can spur the U.S. market. Sales are slowing, unemployment is rising, and people are not spending, need I say more.

There's no real support for an uptrend in the market. When comparing the SEASONAL TREND for the DOW, there is nothing spectacular here and because of slipping international markets, we are falling below the seasonal trend. As we move toward August and September, we will see the seasonal drop in the market. It is then, that Bernanke would want to stimulate the market. Some think that QE-3 would be even less effective that it's predecessors. There are many reasons for this including the already low interest rates, but the length that the stimulus had effected the market became shorter and shorter. So now, the expectation is that a QE might only have an effect on the market for several weeks. What is notable is that speculators are still putting billions into the market, thinking that this time Bernanke will stimulate the market and I will make millons. As long as this kind of reckless investing continues, there is no need for a stimulus package. Hope keeps investors pumping money into the market. Only hopelessness will bring a strong market decline and the need for more stimulus.

THINKING ABOUT WHERE TO GO

At this time, there is really no place to go. Stocks have significantly declined in 2012, falling to zero gains and recently rising 6%. With certainty, stocks will decline further in the next three months and most likely another 20% downward. Bonds have become almost worthless and CD's are returning less than 1/2%. Gold has some promise, but with continued decline in the value of the Euro against the U.S. dollar, the U.S. dollar appears to be a strong currency.  Consequently, gold seems pathetically weak. Look at the chart below:

A recent article pointed out that the wealthy had returned to fixed assets like real estate to maintain long-term wealth.

My view is that you need a reliable investment method and remain consistent in implementing it. Read the blog for May to learn how to get invested. I have 1/3 of my portfolio invested in TIP and BND and will remain in that investment until it falls below the 217 day simple moving average. At the end of October, I will be looking to see if VTI will be a viable investment. VTI is an ETF index of U.S. stocks. I will also look at individual stocks such as FDO, DLTR, CATM, or PETM for seasonal trades during the Thanksgiving/Christmas season.

For now, stay out of the market. DON'T FEEL THAT YOU MUST MAKE MONEY. There is still opportunity to do well at the end of 2012. If you are going to buy something, buy TIP and BND but only if the price is above the 217 day simple moving average. As always, put a stop-sell into place.

(note: the above article is for entertainment purposes only and not to be used as investment advice.)