an tSionna: 6.15.09

Monthly chart of the S&P 500 showing different levels of support and resistance. You can double click on this to enlarge. Note points 1 & 2. These are very long term resistance levels that reach all the way back to 1998! Similar to our posting chart from the other day I think the market is now approaching a binary moment. {See http://lumencapital.blogspot.com/2009/06/tsionna-61209-market-update.html}

One scenario could be that we break through this long term resistance line and head higher. The other possibility is that we fail the first time at this level and back off a bit.

I of course don't know which way we're headed but I do know that after the move we've seen since early March, probability would indicate at least some sort of correction soon. Further supporting this are some very strong statistical numbers regarding market seasonality that are starting to come into play {more on this in an upcoming post}. For risk appropriate accounts I have sold a few positions in order to raise some cash. Not major amounts but enough to lower my exposure levels to stocks if things turn around and head south from here.

I think this is the most appropriate strategy for my clients at this time for the following reasons.

1. It can help us begin to repair certain core ETF positions. We will cover this in depth on how and why you would want to do this as we continue our series on capital gains and losses.

2. It will give us some cash to redeploy at lower levels if stocks do sell off.

3. We will still have enough exposure to the markets to participate in any further rallies if stocks instead break out and trade substantially higher from here.

*Long ETFs related to the S&P 500.

**Note this post is for informational purposes only. I am giving clients and friends of Lumen Capital Management some insight into our current portfolio management processes. That is I am giving you information for how I am managing money for clients of whom I know their current individual risk/return profiles. We make no comments that should be construed as a recommendation for individuals or institutions since we have no knowledge of their own investment profiles. As such, if you fall in this category you should consider that our thought processes might not fit into your own personal investment plans or philosophies. Please consult your own investment advisor or please do your own homework before considering any of the information presented in this posting! We cannot be responsible for any actions that you might take from reading this post.