Pre Flight Fund Trader for 2/7/02
Wednesday 2/6/02
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Real Money Seasonal Trading Account (New! All weightings are approximate)
95% Money Market
5% HGMCY (Harmony Gold).
Sold all Rydex Tempest Fund.
We exited the Rydex Tempest Fund. We would advise you to do so as well. It's about time for a bounce and we shouldn't be greedy. Rydex trades these funds in the morning, so there should be little difficulty exiting. The Gold stocks are looking a bit toppy, so we may take a profit on strength tomorrow.
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
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 a rally could materialize, but i didn't have absolutely compelling reason to expect it to occur or that it will be much to write home about, as yet. That was probably about the best one could call it. The market is not giving us much help, but it certainly seems to be lack lustre.
The market can still rally, and a rally of some sort is due right about now, but so far, nothing is getting going. Oversold indicators are now starting to get up to levels that bring rallies. The same is true with shorter-term sentiment. The VIX is up at the top of it's Bollinger Bands, which usually brings some buying (the bands define the likely range of an indicator--right now the VIX shows pessimism at relatively high levels). The Rydex Ratios show a significant excess of Bearish fund buying as well. The problem is, nothing is showing any really fear. All I am seeing is a bit too much Bearish consensus among aggressive traders
If we get a terrifying collapse tomorrow, early, we would be inclined to buy any solid reversal for a quick trade. I would definitely cover up shorts. If the market opens strong, I would be very inclined to look for a failure. Considering the damage that has been done to this market, I'm a bit surprised that we don't have more folks scared. If we get that fear factor, however, we can look for some higher prices for at least a few days. If we don't see that fear, I'll be inclined to load up on the shorts.
Big picture, there's no reason to go long. Seasonally, however, it makes sense to take quick profits in shorts, as it is usually hard to get a big down move that isn't met with serious buying along the way. If I am making money on the short side during the positive seasonal period, I know to not be greedy.
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Technical Review:
Coppock Breadth Indicator:  Sell. The CBI was down 0.1 to 190.1, 0.4 beneath the exponential. 
ITBM: Negative. Confirmed.
Seasonal: Positive
VIX: Pending 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