For now, I'm sitting on the sidelines and waiting to see how the European sovereign debt crisis unfolds. Two technical analysis blogs that I follow posted SPY -- at best still bottoming, worse to come? and S&P 500 Chart – Do or Die Moment. I agree, the direction is not very clear and there will be a lot of volatility. To me, it's not worth the risk to be in the market. The downside risk is higher than the upside potential.
Yes, I may miss a big short term advance. However, I am avoiding the gut wrenching declines like last week. To me, trade off is worth it: I sleep better at nights. Besides, with interest rates so low, the U.S. may risk the issue that Japan is experiencing-- deflation. So being in cash feels pretty good right now.
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