SUBSCRIBER ALERT
6/29/09
While volume remains lower than I would like, the Averages (DJIA 8529, S&P 927) advanced today. The VIX traded down again. In Saturday’s Closing Bell, I listed three reasons for approaching the volatility index’s Friday close below a support level with some caution: (1) the Russell re-balancing--that’s done now, (2) my usual inclination to allow some time and/or distance following a break of a support/resistance level before assuming the break is real--today the VIX fell another 2%+ [that’s distance] and (3) the end of quarter mutual fund window dressing--clearly we have one more day.
All said, I think there is enough reason to at least start the next move to a lower cash level. I intend to take cash levels from 26% to 22%. However, I am going to take a gradual approach. Tomorrow morning our Portfolios will take the first step, going from 26% to 25%.
I noted in an earlier post that as a result of elevated federal spending and an easy Fed, that our strategy was shifting to recognize a higher probability of inflation. Adding gold and increasing the weight of energy in our Portfolios was a first step. I also noted that I was doing some work on foreign equity ETF’s as a hedge against the weakness in the dollar that would likely accompany rising inflation.
Our Portfolios will purchase initial small positions in the Wisdom Tree Emerging Markets Income Fund (DEM) which yields 6.2% and the StreetTracks Bric ETF (BIK) which yields 2.1%.
Disclaimer
Steven J. Cook is president of strategic-stock-investments, LLC, parent of CJS Research, a registered investment advisor. All material presented herein is believed to be reliable but we cannot attest to its accuracy. Investment recommendations may change and readers are urged to check with their investment counselors before making any investment decisions.
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Posted
06-29-2009 6:11 PM
by
Steve Cook