Domestic Buy Signal Generated

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Given this week’s run-up, the markets held up well today and pushed our domestic Trend Tracking Index (TTI) clearly above its long-term trend line by +1.30%.

This is where the rubber meets the road, which means that a Buy Signal for broadly diversified domestic equity funds/ETFs has been generated. For tracking purposes, the effective date will be tomorrow, June 3, 2009.

We will now increase our domestic exposure via hedged and outright long positions. If you follow along, I suggest an initial allocation of 33% of portfolio value to this arena.

Our exit point at this moment will not be the crossing of the trend line to the downside, since that could happen quickly, but it will be based on each individual holding’s 7% trailing stop loss.

Again, following a Buy signal immediately is not as crucial as executing a sell signal promptly. If you’d rather wait a few days until Friday’s employment numbers have been digested, that is fine. If the rally continues, you merely lose a few points on the upside, while missing a sell signal could have very negative effects on your portfolio.

The old adage “it’s easier to live with lost opportunity than with lost money” still holds true today.

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