Monday, June 22, 2009

Market crash Monday - an opportunity before markets shoot up or new bear down leg?

Consider this graph and commentary from BespokeInvest:

Market Inflection Point
Down 2% at the midway point of the trading day, the S&P 500 is also trading right around its 50-day and 200-day moving averages. At the same time, the 50-day is set to cross above the 200-day soon, which is considered a positive technical formation. If the index ends up closing below both of these moving averages, it will be interesting to see whether the negatives of this breakdown will outweigh the positives of the 50/200-day moving average cross.


Now look at the developing markets indexes - and think: When markets collapse more than 4% in a day at the heel of a bear market, is that a bullish signal or a run for the exit doors?

Russia's Micex index down over 20% since June 1 (and an extra 8.3% today)

EWZ - Brazil ETF down 5.3 today. EEB - brazil, china, russia and india etf down 5.2% today.

I call today's action suspicious and unexpected, but it's just me. Not a professional. It is so disconnected from actual news that it reminds me of the days of September 2009, just before the horrible news poured out. Someone knows something, perhaps some people.

If you feel it is time to turn conservative with your investment, I've collected a few sample portfolios over at iCarra over the last year - go ahead and check it out:

* The smoke and mirrors portfolio: Deflation+Grocery Stores
* The Worst Imaginable Portfolio Of Stocks?
* It’s raining bears (bearded bear static portfolio)
* Go no where Portfolio
* Strategic Income Portfolio
* Collection of Standard Sample Portfolios (Balanced, Conservative, Growth etc)

Here's a graph of my "conservative/income" portfolio, based on the last post linked above:
icarra chart
Allocations:
DES 10% - small cap dividends
DLN 15% - large cap dividends
DON 13% - mid-cap dividends
DTH 5% - international dividends
FXE 26% - cash: euros+interest
PLW 31% - bonds: laddered treasuries

I hope my gut feeling is wrong, and this might just be a simple correction.

Cheers!

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