Market Wrap - week ending 12/13/2013

Hello everyone, as you know from the mid-week update I sent, we moved fully to cash on Tuesday and have remained there the rest of the week.  The market has fallen 1.73% since we exited. 

Although the underlying issues that we track look quite weak at this moment, we have been in this situation a few times prior this year and the market stabilized and continued higher.   As in previous times, we are seeing a calming in the decline and in fact, not much panic at all, which is obviously keeping the market a float. 

Market sentiment is still at an all time high, which although we do not use in our trading algorithms, is notable.  If no one thinks the market will fall, then we likely will not see panic and for awhile this will keep the market in a controlled sideways move.  This doesn’t work forever, but it can for a few months if no new money comes in.

Time will tell if this time it will be different from the previous declines this year.  Certainly this year has been an anomaly, in fact one of the triggers that we use has triggered more times this year alone than over the last 40 years combined … showing that we have a strange market that isn’t acting according to the historical rules.  Moves like this usually end up badly, but there’s no reason that the market can’t continue higher from here for a time.

The next few weeks will prove trying as the big dogs take leave and volume dries up.  The last few weeks of December are usually good ones for the  market, but with such a huge rise already for the year, who knows what we will see.  Certainly with the lower volume, it is really easy for market makers to move the market at their whim, which will make things interesting I'm sure.

For now, we stay on the sidelines protecting our capital.

Hope you have a wonderful and safe weekend.

Respectfully,

Randall Mauro

Resnn Investments, LLC

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