What to Do? Nothing. Hold cash.

Stocks are way overvalued and over bought. Yes, the breadth has been good in the latest rally but I see the equities potentially failing, right here, right now. Earnings fell for the fourth quarter in a row and the economy is clearly slowing down. Could the major indices move up another percent or two and set new all-time highs? Sure. But I see less than 5% upside and at least 50% downside. That’s not a game I want to play.

Bill Gross is shorting credit saying the 30 year bull market is over because interest rates cannot continue to go down. Bill’s smarter than me. So, I’m not in bonds or high yield credit.

Gold is in a correction. I’ve done very, very well with my gold stocks since late January when I declared that gold had bottomed and entered a new bull market. I still own some gold and gold stocks but not as much as I did a month ago. The gold correction’s not over, but when it is, I’m buying with two fists.

Right now, cash looks good.