Despite Upside Market Continues to Struggle

*The first trading day of January expiration week the Dow has been up 13 of the last 18, and was particularly “solid” in 2010

*The January expiration week, however, has been horrible since 1999, and the Dow has been down big 8 of the last 11 years.

*January expiration day the Dow has been down 10 of the last 12 with big losses.

*”Experience is helpful, but it is judgment that matters”.-General Colin Powell

*”The political problem of mankind is to combine three things:

1. Economic efficiency

2. Social Justice

3. Individual liberty”

John Maynard Keynes, British Economist

*”If we did all the things we are capable of doing, we would literally astound ourselves”

*We see, despite all upside and hitting 2008 highs, a market that continues to struggle, and is in the midst of a short term cycle high this week, which marks well with historical facts of the week.

At the same time a strong, almost forceful euphoria has built and an approach of 12,000 may be necessary for a true trigger reaction. We would see any Dow close below 11,600 as a sell signal from longs. This means, except for core accounts, the greatest caution should be in place. Lows on the S&P below 1264 and the Nasdaq below 2263 will announce a longer bearish turnaround.

*Gold should cycle low this coming week, and silver thereafter. There could be, now or later, one more move to test the highs, but we’re suspicious of too much upside.

We have sold our entire positions in GLD, SLV, GLTR, and CEF-all core holdings in gold and silver NEAR market tops. It is our goal to NEVER sell at a market top, but to always leave some money on the table for the higher risk player.

We will reenter precious metals as the sector cycles shift.