Low Maintenance Portfolio - 2 (Market Reading 9/27/11)

Last Friday before close, I raised the question: "where the money go?"

something fishy. gold and silver crashed, but where the money go? not in bond not in equity. i want to follow the smart money, but i first need to find them.
a conspiracy interpretation, they r waiting for the meetings this weekend. with the money escaped from metal market, i will say it could easily push spx up for 100-120 points to like 1240-1260. of course the measurement will be similar if heading down.

Now is time to look back. With the extreme bearish sentiment in the market, where the bulls have become bears,where my favorite trader since yesterday is calling the collapse of the World with GS ruling, the set up for a huge squeeze is here. as I expected, the move up this morning was brutal, and killed many of the new “smart” shorts.
Technically since SPX hit 1195 level, which is just inch shy to my minimum target of 1198-1200 , the rebound can be considered satisfied. I think the brutal part is gone. It may move up a little bit or just correct at current level. It will be a small possibility case that SPX to challenge 1240-1260 maximum target.
How is the portfolio going? As I discussed in Low-Maintenance-Portfolio-1, I am using the approach introduced by Marc Faber, detailed in his book “The Ivy Portfolio”. Here is the recap of my allocation:

• I exited both US and emerging market equity on 7/28 (see part 1), 
• I exited long Gold position on 8/23 when I sent out the "Dear Mr Bond" letter. 
• I am still holding 20% DBC (commodity) and 20% IEF (7-10 years). 
• I added back GC (gold) Monday around 1630 to play a rebound. If the crisis goes on, Gold should not stay below 1730.
• I did day trading on ES (equity), but decide not to add to my long term portfolio for this month, even with my short term bullish view above

Interestingly, I found a CNBC interview with Marc Faber on 9/26/2011 3:00 EDT. Pay attention to the time stamp. Since he is in Hongkong now, the interview is before the Monday market open.



If you are really impatient, fast wind to 1:17. Marc said he expected a short term rebound of Equity this week, but he is not going to buy, since he is expecting a drift lower toward last year low of 1010. He would be happy to buy equity below 1100. He also said Gold is very oversold. He plans to buy in the next 2 days. Stupid CNBC put down:

Marc Faber, author of the Gloom, Boom and Doom Report, tells CNBC that he thinks gold could fall to $1,100 an ounce 

Marc doesn't think the market is down because of Greece, which is an insignificant player of the world economy. It is just the symptom of the problem.  He also hit China on slow down, possible aftermath of infrastructure expasion, etc.

WOW. All spot on. Now we are talking! Do you see how close our views are? Now you understand why I recommend him as my only recommendation? (For the record, not one of my recommendation, but my only one.)

I will surely follow up in the coming month.