Why?

7am Why? That is the question most investors are asking right now. They are asking, "Why should I put any new money to work at this point?" If the market goes down every single day, what incentive do they have to invest in the market. The vast majority of the participants in the market use their 401(k) and maybe some mutual funds. Wall Street sold these highly profitable (for Wall Street) investment vehicles as essentially savings accounts with high yields and some risk. If people were told that they had a distinct chance of losing half of everything in their portfolio no matter how long they have been saving, the money flowing into the market probably would have been much smaller.

That is the situation right now. People have seen it happen. They have seen a huge chunk of their 401(k) evaporate and they hear all the doom and gloom on the news every night. Why put new money to work? My savings account that Wall Street sold me isn't going up anymore. It just goes down every day. That is the big predicament we are in. If there is very little new capital coming into this market, there is little impetus for the market to go dramatically higher.

What makes things worse is that the market is controlled by Washington right now. Even though there are companies with strong balance sheets making a ton of money, no one is looking at them. Everyone is only paying attention to what policy actions are coming out of the government. In the certainty vs. uncertainty battle, Washington's lack of clarity on every policy they have hinted at is keeping the market down. It will continue to go down for the forseeable future while the government gets around to making policy.

So for those of us who understand that the market goes up AND down - and can make money either way - there are always opportunities. Look at the First Solar (FSLR) trade I made yesterday. I set up a non-directional option trade to take advantage of the upcoming earnings release this afternoon. We will see how that goes tomorrow.

The option trade I told you about in the Gold ETF (GLD) is starting to get to a turning point and it is time to watch carefully. If we can hit the $1020 mark or higher, we are probably off to the races. It hit near the recent high a little over $1000 the other day and it hasn't gone higher since. If it continues to fail, you need to get out. The chart wil lbe a definite double top.

I would take a little profit either way. I would probably sell half of what is left of your position. It doubled in November and you took half profits. That means there was no way to lose money on the trade. It has almost doubled again and I would be comfortable taking half of what is left. You let the rest run and pay close attention to the technicals. If you begin to see dramatic moves higher on low volume, it is time to get out. The market severely punishes lemmings. The pros make something move dramatically higher, then the lemmings jump in but they don't have the resources to add any volume to the move. The pros dump their shares on the lemmings, the lemmings get stuck holding the bag. Pros make money and lemmings lose their shirt. It happens all the time. Don't be a lemming. Until next time, stay low risk..