Since reaching a 3-year high back on May 1st, US Equity markets have gone into a serious retracement and given up the better part of the years gains in just 13 trading sessions. In fact in that 3 week period, the SP-500 was down all but 2 days and the Dow 30 was down all but one day! That's some pretty serious selling.
As for the reasoning, the media has been pointing to a "Fiscal cliff" that will occur at the end of 2012 when several forms of tax breaks and market stimulus expire. Also, the US Debt ceiling issue will come up again, And recall the last time at happened, the US lost its AAA debt rating. And remember the "Super committee" that was formed to solve the financial deadlock? They have accomplished nothing and just pushed the issue off into the future.
As usual, Europe did us no favors this week with political turmoil in Greece causing panic in the local economy as people stashed away Euros and prepared for an eventual exit of Greece from the EU. About the only good thing that happened was a flight to safety to the US Dollar which caused some good downside action in EUR/USD and finally made some profts for our Automated Forex Trading systems.
And speaking of Automated Forex Trading, conditions remaining challenging with every account in the red for the year and now in red overall since the start of trading back in 2010. One by one, many of the systems have failed either in demo or live trading. This week provided a bit of a bounce, but its going to take a pretty serious string of winning trades to get us back into profitability for the year and overall.
Back to equities, I have been able to capture some pretty good profits and I'm sitting on some nice realized gains for the year. After the sell offs in 2008 and 2011, I've learned that you have to grab profits when the appear, because they can just as easily go away. And all that selling has my portfolios at close to 50% cash which is the highest level of cash in the past 2 years.
That's all for now. Stash your cash and have a great week.
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