Friday, January 20, 2012
Weekly Market Crash Indicators
This week we move from DEFCON 1 to DEFCON 2. This means we are now 75% invested from 100% invested. Things are getting a bit frothy and having some cash to deploy at lower levels will prove useful.
In January, 2011 we began to produce commentary called "Market Crash Indicators". It is now fully produced on a weekly basis only in The Buttonwood Club, detailed breakdown.
Below is our review of the calls week by week. Each week we look at 5 indicators of market peaks and troughs. They are technical in nature. We then take these five indicators and assign one rating to them.
DEFCON 5 is the worst rating and DEFCON 1 the best rating. This rating system is the inverse of the miltary's DEFCON rating where 1 is the worst.
Below is our summary table of our weekly DEFCON ratings. For each DEFCON Rating we assign a percentage invested or short, ranging from 100% long to 110% short. They are as follows:
This methodology has resulted in a return of 23.72% versus the S&P 500 return of 3.27%.
Today's Superstock Investor Stock Scorecard:
GENERAL ELECTRIC CO (GE)
Articles That Matter:
Do Not Cut Too Much
IMF Head Christine Lagarde warns governments not to cut too much or the ramifications could be dire. These words are important as they come in front of the World Economic Forum in Davos, Switzerland.