Doc Barter Market Musings - Feb 17th

17 February 2011

Market – Very Cautious -

Those who have read my articles in January 2011 were aware that I could not share the opinion of market top callings. As pointed out, the weekly chart had no sell signal. Meanwhile the SPX has risen further and NDX has been again the leader of late. In my last article dated 12 February 2011, I pointed out that a target of 1377 (1370-1380) is possible as it is the 78.2% retracement level from October 2007 high to March 2009 low. Well, we are now trading above 1330 in SPX and we are not far away from that target.

Let me make it very clear, I myself have acted very cautious towards a very complacent market and YES I reduced my portfolio drastically and of course a bit too early. No harm done though.

Porfolio:

40.00% - Equity long since end July/early August 2009

Mix of Emerging Markets, Agriculture, Mining,

Oil & Gas Stocks, Fertilizer, Coal, tiny Financials

2.50% - PM sector long since 27 Jan 2011

2.50% - Long China & Vietnam 27 Jan 2011

5.00% - High Yield Bond long since July 2009

5.00% - PM Sector short from early December sold 26 -27 Jan

7.50% - Emerging Market shorts early November sold 14 Feb

2.50% - Basic Materials Short bought mid January =>shafted

7.50% - US Index shorts (bought 1265-1291-1299) => shafted

40.00% - Cash holdings increased since early November selling

Emerging Markets, early December selling some

Commodity holdings.

Look Out for –>

• SPX approaching 1370-1380
• SPY/BOND Ratio falling
• Copper falling
• Bonds rising
• VIX forming a multiple base at 16

(charts courtesy of stockcharts.com)

SUMMARY:

Nothing much has changed since I showed several indicators dated 12 February 2011. So it is not worth showing them again as they are still pointing up. Dow Theory however has seen a sector change as Utility has dropped to 50dma as Transport did earlier.

Gold -> neutral

Silver -> slightly bullish and waiting to break 31 USD

HUI -> waiting to break 545-550

VIX -> forming a base at 16

Bonds -> recovered slightly and bounced as previously expected

NGas -> Neutral

USD -> bounced to 50dma and dropped a bit. - Neutral

I am not convinced yet with PM Sector as Gold is lagging and Silver is crawling along the monthly trend line.

I do however like very much Agriculture. Lean Pork, Sugar, Orange Juice are ready to break out. Said it earlier this year, my best guess for 2011 is that Agricultural Sector will outshine in 2011 as they lagged a bit in 2010.