The market rose sharply this week. Since I am completely out of stocks, I was not helped or harmed by this turn around. To reiterate, I am out of stocks because the short-term trend turned down. However, I am not short stocks either because the long-term trend remains up.
Below is a chart of the S&P 500 going back to the mid 1990's and shows the long-term trend of the market using a 100 and 150 moving average cross over.
The areas highlighted indicate times where the long-term trend was down and shorting would have been acceptable. In my view, shorting stocks at this time is still premature.
While stocks are neutral, other areas are, in my view, more positive. One such area is gold, which I bought through the exchange traded fund GLD this week.
Unlike the S&P 500, GLD remains in an uptrend and is looking strong to me.
As I continue to wait to see whether the stock market tells me to buy stocks again or to short stocks, I enjoy exploring new trend following related resources. Below are a list of resources that I found useful this month:
1) Michael Covel's Peter Brandt Interview
2) An article by Automated System Blog
3) An eBook by Trend Following trader, Nick Radge
4) An article by Stock Market Trends Blog
5) Nassim Taleb's newest book