Market Fizzling! Was that a rally or a fake out? June 23 2009

Bloomberg News-The benchmark index for U.S. stock options climbed the most in nine weeks as equities tumbled on a World Bank report that the global recession will be deeper than expected. Europe’s VStoxx Index surged the most since November.

Bloomberg News- Executives at U.S. companies are taking advantage of the biggest stock-market rally in 71 years to sell their shares at the fastest pace since credit markets started to seize up two years ago. 

Marc's Notes:

The Dow continues its slide off its recent high 8,000's to end up in the mid 8,300's and investors are beginning to wonder if they been led down another dead end by CNBC and the other financial news medias. After all, weren't you told the "green shoots" were sprouting and new growth was just around the corner?  Humm.... Fooled Again!

Why am I so pessimistic? I'm not really. I am OPTIMISTIC about making money where and when we can. I am just pessimistic when I look at the economic figures I am seeing. You don't need a weather man to know which way the wind blows.

Foreclosures are accelerating, un-employment is rising, the worlds 8th largest economy may be about to default and meanwhile the FEDS throw money willy nilly to everyone but YOU. Who can be optimistic about that? 

Read article one above. The World Bank is forecasting more dire news about the future. They ought to know better then Maria on CNBC, don't you think? Not that I am a fan of the World Bank but you have to get your news where you find it.

More ominous is article 2. Back in 2006 I warned that the homebuilding CEO's were dumping stock by the boat loads and that signals something is up. After all, who knows more about company stock then the heads of the companies. Now look. It is happening again!  CEO's are dumping, just like they did in 2006, but now its ALL companies. If you don't think this is important, then mail in your cash to  them. It will be the same in the end anyway. If THEY are selling, don't you think you should sit up and take notice? This type of selling by CEO's usually precedes market crashes. If history holds true, they are selling for a reason. This latest market rally is their gift. And yours. They are using it to unload before the next leg down.

If there is a NEXT leg down (which there is)  then get off the tracks before it comes. You could have just witnessed a classic BEAR TRAP. A fake out rally to suck in more of the publics money before slamming it down again. Could we see DOW 6000 again? Yes. Or 7000, or 5000, or 3000. You just can't tell. So we prepare for EVERY possibility by diversification as best we can. IF another deflationary slide is in the cards, EVERYTHING will go down except CASH and CASH equivalents.

That is why most of your money should be in BANK cd's, Treasury funds or the other funds we recommend. Couple that with a Swiss Annuity and gold and silver and commodities, and at least you won't be hammered as badly. 

Holdings:
As mentioned 3 weeks ago, I increased my CONTRARY funds (Funds that go UP when markets fall). Increase your contrary funds a bit more as we go down.

We continue to hold our OBAMA plays but they are now back in the RED. Darn it! We got so close!  HOLD for the "maybe" rally.

Commodities- HOLD and ADD for inflation protection. Our DXO was stopped out at 4.50 as mentioned as was SLV at 14.50. When SLV reaches 12.00 or 12.50 again, load the boat. DXO should be added under 3.50 or thereabouts. UNG is holding comparably well and our choice to leapfrog FROM DXO to UNG was a good call. I continue to hold UNG. I would be ok adding more for my clients.

Foreign Currencies - Hedge against a possible US dollar fall. HOLD and ADD.

Safe Money T funds like SHY  VIPSX  TIP: I said to consider lightening up on these and moving to BIL or SHV. These don't pay as much but won't move as much if the US dollar starts to crater.

Shorts- Ok to look at select retailers to bet on a fall in sales.

Physical Gold and Silver- I always add when I can. Need some? Contact me or the MONEX contact below. Buying from me is available right now as I have extra but I charge more then Monex. The only advantage is you buy from me directly and I meet you with it somewhere. I only will provided Gold though, not silver.

Bonds- NO  NO  NO!   Unless they are US GOVT bonds less then 2 years.

Those holding insured or tax free muni bonds are probably about to get their heads handed to them, as we have been warning you. NO  NO  NO!

All other holdings remain as before.

Of Special Interest:

I am doing a news item on the airshow and I will be flying in formation over Grass Valley and Nevada City after 10.30 am or so in a 4 ship group. Look up and wave around that time if you see us. (Tues- 6/23)

NCTV- Filming a show with them tomorrow to air Friday,  26th June at 4:30 pm and
air again on Monday June 29th at 6:30 pm. PST on both.

All for now. News at KVMR has moved my newcast to 6:00-6:30 PM PST.

All the best,

Marc