People have it in their heads that market timing is impossible and they shouldn't try it. If you've read, and believe, Investors Business Daily founder William O'Neil, then you know he does not subscribe to that view. Obviously, the mutual fund industry wants you to believe that buy, hold, and diversify is the right strategy, even though it won't make you any money.
I've been struggling with market timing for years. It is definitely difficult to learn but worth studying, I believe. Not to say that I have it figured out, but having broken even over the last 12 months, I'm a lot better off than the S&P 500. I was off in my prediction of a market rally by about a month. By my calculations, it should have commenced in early February but it held off until early March. Trying to figure out a top to this rally is a bit more challenging, but I think that the Nasdaq's close above 1880 this week was a great sign.
I'm no fortune teller, but from reading the charts I think that the Nasdaq is going to run into serious resistance at about 2200, which means we could still see a significant rally from here. Keep in mind that the rally is already 20 weeks old, however, and could end at any time. I think 12 weeks is the maximum length of the rally from here and that by October it will be dead, if not before then.
How the U.S. dollar performs and the inflation trade plays out is also difficult to say. Will the dollar rally again when the market starts heading south? Will oil prices collapse again or hold up? I don't know the answers to these questions, but I would keep my inflation protection in place. Any questions on inflation protection, see Jim Rogers or Peter Schiff.
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