Cash is Trash

Folks, this is the most net long I've been since day 1. I tossed out some more UltraShort Russell 2000 (TWM) early this AM - which is good since it dropped 4% today and applied all cash - I am now looking under couch pillows for a few dimes. Now if this were the future and this were a real mutual fund I am sure you all would be sending in money for me to apply so I could open the cash register tomorrow and find new cash but in a world of no new inflows, I don't have that luxury.

The best case scenario for how I am positioned is a nice 2-3 day rally, which would allow the unfairly hit sectors to bounce (more than the indexes of course) and I could lighten up, rebuild some cash, and rebuild some short positions. Financials actually rallied today; as I mentioned over the weekend, the drop has been too swift and all in 1 direction with no countertrend rallies, and that cannot go on forever. So I'd like to see some bounces in the trashed sectors to put back some exposure in my now smallish short positions (a huge drop from where they were a week ago today).

I'm still of the position the market is in a state of denial. But with the Fed cutting in a few weeks, we could have that underpinning the market. So upon the next rally, I will be lightening up in some of the winners, and rebuilding a short ETF position, probably akin to the 14% or so size I had on 7-8 days ago. What is concerning is even the "industrial" leaders with great foreign exposure are providing some not so great guidance. I did expect that in the domestic based companies but I didn't think the US slowing would cause even the multinationals to pull back the reigns so quickly on guidance. This tells me they are seeing serious weakening trends domestically. And the market is just not pricing this in; this potential for limp earnings growth (or dare I say, lack of growth) in many companies in the year ahead.

I've been able to reposition in stocks I really like now, in sectors I favor most. That said, as the past few days has shown in true bouts of weakness there is really no port in the storm, so the overall plan is to continue to take profits when they are offered by the market and get back to a more balanced approach of some cash and greater exposure to short ETFs - much like I was positioned a week ago Friday. But for now, let's get a rally going on. ;) I hear helicopters in the distance.... less than a fortnight away.

Long UltraShort Russell 2000 in fund; no personal positions