Dow falling the 11,000. Is this the end?

First, I guess I should apologize to all those out there in cyber-land for not responding to all of your questions last week, if you have been reading my blog for a while you know that I have been telling everyone I know that it is my opinion that the market was going to have another major dip, so as a result I decided to step away from the old chess board for a moment to get some distance from the market and my portfolio. In the army we would call this a "Tactical Pause" and it is a great opportunity to take a moment and gain a new perspective and avoid "tunnel vision syndrome".

So here we are, the DOW slipping below the 11,000 and for some people out there that means all the gains they have amassed for the last two years have are gone. That is pretty crappy. That is all is can say about it.

So what about the week ahead, well ladies and gents out there I wish i could tell you. The past week was a tough week to gauge filled with contradicting indicators. The Volatility Index (which i use to gauge the number of bears out there) although high was not to a level to cause a new low. The Advance/Decline numbers seemed flat to me. And at the beginning of the week we had another round of headlines talking about more credit issues and write downs that the market almost completely ignored but put the news back into the price on the close of the week.

So what now, well i could tell you in my gut that the market is going to have a strong Monday as Institutional investor jump in and lower their cost basis and open new positions then later in the week test new lows as people profit take from the bounce, but that is simply my gut feeling I have no, in my opinion, real data to support this. The matrix I have developed tells me a flat week ahead, but it does not take into account the emotions of investors.

So again what do you do? although your plan of action is really based on your personality and what has worked for you in the past, unless you have you survived the tech bubble of 1998 and have decades of investing experience, in which case i doubt you would not read my blog, you are in uncharted waters which when it comes to money is a bad place to be. Uncertainty in the market leads to volatility, which leads to more volatility. So in my portfolio uncertainty leads to CASH, CASH, and more CASH. You can make allot of money on weeks the market performs like a roller coaster, but only if you have cash to make your moves.

So never be all in and never be all out of the market. Find the mix of long and cash positions that work for you. The more uncertain you are the more cash should make up you portfolio and the shorter your investing horizons should be. In times like these, it is my opinion that you worry about not losing your nest egg rather than missing some golden opportunity. Trust me you'll sleep better at night. Remember there are a over 4000 opportunities a second in the market, you just have to find them. So get get CNBC or MSNBC tunnel vision. Take care all of you,
T