Pre Flight Fund Trader for 2/5/02
Monday 2/4/02
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Real Money Seasonal Trading Account (New! All weightings are approximate)
80% Money Market
5% HGMCY (Harmony Gold).
30% Rydex Tempest Fund.
We are more than a little bit short and and happy. The trend had broken and the market could easily fall out of bed. Still, we'd expect a little bounce. We were right about not dumping Harmony Gold. We only wish we'd bought our other favorite DROOY as well.
Our managed tracking account is up 16.98% for the 18 months since June 30, 2000. This is a very conservative approach (~1/3 the risk of the market), using both long and short funds as well as the occasional favored sector/stock idea. All performance is net of fees, commissions, and interest. Your results may vary, and standard disclaimers may apply. We DO use discretion. For further information, call us now. 
Active Model
Bot 33% Profunds Ultra Bear 10/2.
Bot 33% Profunds Ultra Bear 10/3.
Bot 33% Profunds Ultra Bear 11/15.
The market is driving us nuts, but the trend has turned. We have committed, perhaps foolishly, to holding this one. Cover all positions if we print 1065.
Hedged Model
50% Waterhouse Dow Fund (WDOWX)
25% Profunds Ultra Bear
Watch out for a memo. We may increase our Ultra Bear exposure.
The MACD is negative, and the Weekly MACD is negative. The Seasonal Cycle is positive, but now less so. We are Bears.
VIX Trader
Flat.
Sold 1/2 position in Profunds Ultra Bull from 1/16 a/o 1/31.
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Last time, I said that the trend was still down and I continue to call for the recent lows to be taken out. So far, so good. Yesterday, I also pointed out the potential for both weakness and a potential reversal if we got that weakness early in the week. We got it, so now I have to look for a bounce. Things really didn't get THAT overdone, however, so IF the market rallies, I'll be inclined to short it.
One thing that makes me look for a possible rally is the ARMS (aka the TRIN). This indicator measures not only how many issues are trading down, but how much volume is being sold vs. bought. This indicator can tell us a lot about the flow of money. In this instance it also tells us that there has been excessive selling today. The ARMS Index went out at 2.53 today, and I've learned from experience to expect at least a one day bounce when that happens. The VIX, as I'm sure others have noted, is also relatively high. This too supports a short term rally. Thereafter, however, we have to continue to respect the trend. It's down. Period. The VIX is NOT at excessive levels, so any rally has to be viewed as a place to sell.
There is plenty of room to fall. I would avoid all longer-term long positions until AT LEAST the 1060 area. The earnings fiascoes are creating a crisis of confidence. This won't go away easily. Mutual funds don't have that much cash on hand, either, and if redemptions begin to rise, they could be in deep trouble. So could this market. Don't get too bearish, but be alert for the worse case scenario to develop over the coming weeks. I'm not predicting it, but forewarned is forearmed.
We have to love our shorts, at this juncture.
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Technical Review:
Coppock Breadth Indicator:  Sell. The CBI was down 0.4 to 190.3, 0.2 beneath the exponential. 
ITBM: Sell. Confirmed.
Seasonal: Positive
VIX: Nearing a Buy.
MACD: Negative.
Weekly MACD: Negative.
If you have questions, call us.
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Mark Young
Steward Analytics, Inc.
513-232-0700http://www.traders-talk.com/PFFT/instruct. html  http ://www.traders-talk.com