Now what?

I had a talk with a friend at work prior to the election and we spoke about what might happen if Obama gets re-elected and if the Bush Cuts Expire. I told him you have to put yourself in the shoes of a big time investor and think about tax burden that will be put on them if they expire. They will go up a minimum of 5% on Capital Gains. I do not know every little detail but I know they fear that if they do not cash in their profits now, the taxes paid will be much larger. They knew if Obama got re-elected, even if his intentions were to roll them over or delay them, that he may not be able to pull it off because the House majority still reside with the Republicans. Basically  there are just to many unknowns for investor. I truly do not believe this is a statement against Obama but a statement that there not willing to take the risk with their profits.

So with all this information and watching the crushing the past two days, I called the official bailout and retreated to the safety of the G-fund with all my funds. I want to sit back and watch price action and let it give me a better opportunity to make money. On the S&P 500 chart above I marked a low risk entry and high risk entry. I like the low risk better because if price rises to and closes above that bar, then price would also be above the 50 day moving average.

Tomorrow, Friday November 9th I expect that now that I bailed the markets will bounce, but I could not take anymore pain. A bounce here would not surprise me because we are oversold big time and this much selling this fast sometimes brings in bottom shoppers. Either way, I will wait for a better environment. If you are curious how much gain I was actually to hold on to, it was 12.52% for the year.

Here is a link to the perfect storm CLICK HERE