Bernie gets 150 years

What a light sentence, just a year for every 27 million stolen... from charities no less.
Bernie should have gotten a year for each $20,000 stolen, much like "blue collar" criminals would have gotten. That would put Bernie behind bars for the next 200,000 years. But as a "white collar" criminal, Bernie gets a slap on the wrist like his other Wall Street peers.
Of course he'll die in jail, so it doesn't really matter what his sentence is from that standpoint, but for those of us doing the math, white collar crime is looking like a good way to make a living.
Perhaps the criminal system will redeem itself somewhat and lock up everyone who was in on the scheme, including his wife and his sons.
Nonetheless, Bernie's sentence restores some of the faith that we all lost in Wall Street over the past few years. Maybe just 1% of it, but it's a start.

Selling DDM and SSO

Click chart to enlarge

This may be a bold move, but Tuesday, June 15th, we're going to sell just about everything. If you look at the chart that we posted on April 8th, we extended the lines out in such a way that the Dow would reach the 200dma sometime in June at a price of 8400 to 8700.

That's pretty much was has happened. But the eerieness of the predictive nature of that line drawing is not why we're selling.

We're selling because we're in a bear market, trending lower below a downtrending moving average and we just rallied back to the resistance line. We're by no means calling for the kind of plunge that we drew on that chart posted on April 8th. This is not meant to be an apocalyptic post calling for the end of the financial markets. That ship has sailed. We're not saying that the market is about to crash, but that we feel we've gotten to a point where the risk outweighs the reward. People have become complacent, and the fundamentals do not support complacency.

Sure the market could continue its run to 9500. But if it does, it's coming right back. So where's the gain? It's extended to a point now that a further rally would be excessive. Not impossible, just excessive.

Economists are calling for growth by the end of the year. We feel they are being too optimistic and setting us all up for disappointment. Gas prices are on the rise again, talk of higher interest rates has curbed spending, and the job market has yet to improve in a significant way. So where have we gotten since hitting bottom in February? Did we deserve the last 2,000 points? We happen to think we did, as the selloff was overdone. We just don't think we deserve another 1,000 points. Or even another 500 for that matter.

People are treating this market as if we're setting up for the next bull. We're nowhere near the next bull market. A bull market is not just an uptick in the stock charts. It's a whole new era in innovation, creativity, technology. When Al Gore invented the internet we had a bull market on our hands. This is NOT a bull market.

We're not suggesting anyone should follow us in selling everything. We just decided that it's time we start making bolder moves with our portfolios, and letting our gut have greater influence.

We continue to believe in our earlier forecast that the market will remain rangebound between 7000 and 9000 for the remainder of the year, and only slightly improved (7500 to 9500) throughout 2010.

So here we find ourselves at Dow 8600 weighing 400 points of upside against 1600 points of downside with the tune "you gotta know when to hold 'em, know when fold 'em, know when to walk away and know when to run" going through our heads. Thanks Kenny.

Sorry for not being more active blog authors. We do read the comments that everyone writes, but time constraints keep us from posting more often. There's also no need, as one post pointed out, to keep reminding everyone on a daily basis that the market is rangebound.

After selling tomorrow, we will likely post more often, as we'll be looking to get back in soon enough. Good luck!

200 DMA

Click chart to enlarge

We just updated our performance for the first time in a while, and after one year on this blog, we are down 6.8%. The Dow is down 30.1% over the same time period. Not a great year for us, but we did manage to not lose big, and that's what 2008 was all about.

As for the market, we were hoping for Dow 9,000 as an opportunity to sell some shares, but we're hitting a major hurdle right now. We've run into the all-important 200dma. The 200dma is universally used to distinguish between bull and bear markets. It's the dividing line, so to speak. Technically, this would not turn into a bull market until we're trading above the 200dma and the 200dma is moving up as well. This takes time. For now, though, a significant break of the line would be a major milestone for technicians, and give hope to all that the market has finished its slide.

If we were more heavily invested at this point, we'd be lightening up on some of those shares right in here. However, considering we're only about 1/3rd invested, we're just going to wait and see. If the market does get rejected at the line and resume its fall, we'll just be adding to our position all the way down. It's hard to believe that we could possibly launch any kind of sustained bull market given there's no new industry or invention driving it. All we've really done over the past couple months is make up for a severe over-correction in the market. Hardly a bull. If we had to guess, we would vote that the market drops from this point. However, Government Sachs may have a different idea for the near term future of your 401k that we're not privvy to.