Changing Tactics

The stock market did provide a profitable rally to trade
over the 7/18 - 8/3 period, for which I am thankful. But
my view is now more cautious for the short run. My basic
trend index -- which measures buying pressure net of
selling pressure and is not a price index -- has remained
in a waterfall decline since making its high on 5/9 of
this year. the main reason has been the strong down volume
behind the declining issues over so many days since 5/9. It
suggests a relatively steadily deepening oversold for the
broad market reflecting pressure on small and midcap issues
and positive rotation into the more narrow SP500. I have
no problem with a rotation toward big caps, but I do have a
problem when the key broad barometer I use does not confirm
a positive turn in the market. At this point, I think risk
a bottom and stay out of the market until my basic index
shows some authority to the upside. For reference, the
1700+ issue Value Line Arithmetic ($VLE), a non cap weighted
index, is a price index I like.

I am also happiest trading when things going on out there in
the world are not nagging at me. I am concerned about Iran's
adventurism in Lebanon and how It will express its decision on
the incentives vs sanctions deal re its nuclear fuels program
set for Aug. 22. My concern here is that Iran, now on quite
a geopolitical roll, will overplay its hand with consequences
not good. This is a personal decision and not one I would offer
as advice to others. I have no insider insights to share on
this, just a deep concern.

If in the interim the market gets itself into high gear one way
or the other, I may trust its wisdom and play. But for now I
am in cash and on the sidelines until the geopolitical faultlines
clarify some. I will of course keep up the blog.