What can we say?  If you were paying attention a little before 9:00 am PST you would have seen the highest point in the Dow Jones since June 2008.  Yawn.  Tech stocks lagged most of the day and had a bit of a rally in last few minutes of the day.  Oooops I just remembered I had a turkey sandwich and today is a Friday in Lent.  I made up for it tonight as I had cheese enchiladas at dinner.  But I digress.

The big industrials and big transportation stock carried most of the weight after we got the kick from the decent Job's report.  Again, the volume was very weak.  It is important to know that the IBD (Investor's Business Daily) is declaring the market in a confirmed up trend, but the accumulation/distribution rating for both the NASDQ and DOW are E which is terrible.  In essence the market does not have much if any conviction.  No volume from the big boys.

In my reading tonight, there are some technical indicators that suggest the market will move up next week.  I am not doing out on that limb till tomorrow morning when I can get my Barron's and look at the week ahead.  It does look like a quite week ahead as  far as data points next week.  Monday Bernanke goes to Stone Mountain to give a speech to the Atlanta Fed, Tuesday the Institute for Supply Management index report comes out, the Fed releases the minutes from its last meeting zz z z z z z z  z, Wednesday we have the petroleum inventory report and that could be interesting as today we broke $108 and barrel for while, Thursday we have the Bank of England and The European Central Bank announcing monetary guidance (Financial speak for with they raise their rates?), Thursday we will see initial jobless claims, as well as Consumer credit numbers, and Friday we got nothing.

This week we sucked.  We got two data points correct and saw the market go up to our amazement.  We'll give you the recap as well as our quick guesses for next week manana morning after we look into the crystal ball.     

To Sell or Not To Sell

Any how, the article yesterday explained that the 7-8% loss to 20-25% gain scenario is for a normal bullish market.  As you know we are in a confirmed uptrend, but it is very sluggish.  Not much volume happening.  Leaders is sector are not robust and really charging away.  The article suggests tightening the loss gain returns but keeping the ratio.  For example take the loss at 1-3% and take a profit (or reset) at 3-10%.  This might be good advice in this lackluster almost sideways market.  It also makes sense depending upon your overall investment goal.  Ours is the 10 year yield times 2 which current results in an overall goal of 7%.  If I take that 7 and use the 3 to one gains to losses ratio, we might consider selling at the 2.33% range. 

Food for thought and thanks for the idea IBD. 

We can't take credit for the subject we are about to address as it was covered quite well in the IBD yesterday.  As you know the CANSLIM trading strategy endorsed by IBD has 20 Simple Rules.  One of those is to always sell you stock after it has dropped 7-8% below your entry point.  We will admit it takes a tremendous amount of focus and confidence to blindly follow that rule.  Trust me, I have been stung twice in the last week with EBIX because of the rule, but overall it has served us well. 

The idea behind this iron clad sell rule is that you are looking to take a profit at 20-25% so it becomes a 3 to 1 ratio guidance.  If you sell at 7% down then look at taking a profit (or resetting your stops) at 21% up.  That way you can have a 3 to 1 loss to win ratio and still break even.  (In our case maybe we need to loose money on EBIX three times before we make money?)

Salve Lucrum Charity Stock Challenge 

We ran some numbers based on prices today April 1, 2011 and our average return is 2.38%.  Our best performing portfolio has a return of 10.77% and that was not the one with the UNG holding.  The proud owner of that portfolio was correct as  On February 16, 2011 United States Natural Gas Fund, LP (the "Registrant") issued a filing announcing a two-for-one reverse split of the units of the Registrant. The reverse unit split will take place at the close of trading on March 8, 2011 and will be effective on March 9, 2011.