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Today's Commentary
 
Wednesday, July 26, 2017


As for me, I stopped trying to call the direction of the market a long time ago. And I'm not going to try call market direction ever again.

That said, I do know that when the market looks the way it looks right now, people tend to get complacent... lazy... dull... whatever you want to call it.

Their complacency may cause them to play fast and loose with their discipline and strategy.

They turn their backs on the very system that positioned them to profit from this market to begin with. Why?

Simply out of fear of missing out on the next market surge.

Previous market tops (which, remember... I am NOT calling here) have all happened when the market looked the most bullish (to most people).

Ask the next ten investors that you know, whether they be individual investors, fund managers or brokers how many stocks they are short (or how many stocks they own put options on)...

And I'll bet that at least eight will say ZERO. ("What?! Everything is bullish. Portfolio protection? Don't need it!")
This isn't my opinion here. I have indicators (That is, DATA) that tell me exactly what's going on in the market, how comfortable people are feeling, and how much protection they have against a correction.

And I can tell you for a fact that people are at historically comfortable (unprotected) levels.

I'm talking levels of comfort that we saw right before the crash of 1987, and also about the same level of comfort we saw at the end of 1993 which was followed by a two-month 9% correction for the S&P500 in early 1994 (early February - late March.)

Complacency, however, doesn't necessarily spell disaster.

The one other time since 1993/1994 that investors were this comfortable was in July of 2005 which was followed by a 4.8% correction in the S&P500.

I assume that you know what happened after that.

If you don't have a system to help you determine what's happening TODAY, contact me for information on our various platforms of 1%@Risk, Long-short S&P 500, Halloween Fund, and others.  
  


 
 
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