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How To Invest and Protect Your Capital for the Long Term, But Trade For The Short Term

With the market gyrating wildly I thought it would be a good idea to remember the big picture. Back in September of 2017 I first told you to start gradually reducing your exposure to stocks with the goal of ultimately getting to 60-70% cash by January of 2018. As last year went on, the signs were getting more bearish and I suggested going to as much as 80% or even 100% cash by mid July.

Those warnings were a little early, but then the market started to break in October. From there we saw a huge plunge until Christmas Eve, and then the spectacular rally since then.

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Follow the money. Find the profits! 

My mantra since the middle of last year has been to stay out of the market. Don’t chase it, and keep buying and rolling short term T-bills, because interest rates will go higher. The underlying trends of money destruction and massive US government debt issuance virtually assure that.

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Despite lots of government machinations – some would say manipulation – and despite a torrent of soothing words about the market from the top, nothing has fundamentally changed. The Fed has only talked about softening monetary policy. It hasn’t actually done anything. Nor has the government done anything about reducing the torrent of Treasury supply that will pound the market for months and years to come. The government shutdown has reduced supply temporarily, but sooner or later GSD will end, and Treasury supply will return in spades.

Meanwhile, long term technical indicators suggest that stocks are in a bear market, and will ultimately go lower than they were at the December lows.

Just not yet. The charts suggest that we’re not finished with the upside in the short run. There’s a trendline from the October and December peaks that’s now at 2686 on the S&P that has a big fat bullseye on it.

If that’s cleared, then traders will set their sights on the rising long term trendline now headed for 2800.  But before that, they’ll run into my smoothed version of the 200 day moving average around 2750, where a pitched battle is likely to be fought. The outcome of that should signal the market’s next big move. I expect that to be down, based on the monetary context and the patterns of long term technical indicators.

Click to view full size.

As those target areas are approached, I’ll be looking for signs of whether the rally will extend or roll over. While I’ll occasionally offer suggestions on how we might play the short run, my job is to help you stay focused on, and understand, the big picture so that you can protect your capital now and grow it for the long run.

But there are opportunities to profit from the market every day, regardless of its direction. Our research gurus here at Money Map Press devote themselves to finding and helping you to take advantage of those opportunities, particularly with options. If used properly, our lower-risk options strategies can show you how to potentially multiply your trading capital many times over in just a few months.

One guru that can show you how to do that is Tom Gentile. Shocking footage: This guy isn’t your typical stock market millionaire

Regards as always,


Lee Adler

The post How To Invest and Protect Your Capital for the Long Term, But Trade For The Short Term appeared first on Lee Adler’s Sure Money.

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Lee Adler

I’ve been publishing The Wall Street Examiner and its predecessor since October 2000. I also publish LiquidityTrader.com, and was lead analyst for Sure Money Investor. I developed David Stockman's Contra Corner for Mr. Stockman. I’ve had a wide variety of finance related jobs since 1972, including a stint on Wall Street in both analytical and sales capacities. Prior to starting the Wall Street Examiner I worked as a commercial real estate appraiser in Florida for 15 years. I also worked in the residential mortgage and real estate businesses in parts of the 1970s and 80s. I have been charting stocks and markets and doing analytical work since I was a teenager. My perspective is not of the Ivory Tower. It is from having my boots on the ground and in the trenches of the industries that I analyze and write about today. 

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