Bill, this is a fabulous report.

Page 3 of this report mentions the current probability of recession is at 46% and shows how it is computed. The lowest seen before a recession is 67%, but once it crossses 50% there has always been a recession. This would be triggered by a slightly larger bp inversion between 10-y and 3-y yield rates (currently the difference is 0.3%, needs to go move another 0.45% for the recession to kick in, if the current fed. rates stay the same). Many other interesting notes as well.

To Bill and the Board,

Should I be preparing to move my small cap fund for my 401, which has has outstanding growth over the past 2 years to a more cautious fund, heavy in PG/JJ/GE/Pepsi etc.
The report said it may be too early to switch to the cyclicals but at the same time it could be too late for some to change stride if something abrupt happens.
would the small caps be more at risk during a recession, if it were to occur?

What I found very interesting was on page 14 where they looked at the Sector/Group performance the year after the fed's last rate hike going back to 1956. In the U.S., the Gold and diversified metals & mining sectors were the bottom two sectors and in Canada were in the middle of the pack. So like everything else right now we are being pulled by conflicting analyses. Does the data over the past 50 years point to a dismal 1 year future for precious metals, or does the bull run continue?

I wouldn't touch the consumer defensives like PG/CLX/GIS/etc with a pole right now. The "flight to safety" since June has attracted the mo-mo monkeys and now these stocks are grotesquely overvalued. PG trades at 25 p/e right now.

These stocks are overowned at this point and under distrib, IMO. They will likely be a source of funds for a while here. So I would urge extreme caution in adding to any "safety" positions here, despite what Jimmy Krammer says.

Thanks for the input Leewhee.
I am just wondering if I should worry about my more aggressive funds, and even though the defensives may be overvalued, there losses would be less extreme than say small caps?
I am just trying to maintain the worth of my 401 during possible tough times. It was shredded in 2000-2001 because I kept an aggressive stance through out. It has paid off since, but I'd hate to lose that ground again.
Then again, Bill just posted what is described as a very Bullish outlook on the sp500 by a lady economist (Grazenelli?) or something close.

It's all very confusing.

Sorry Bill, I should have pointed out your stance was still Bearish. I caught that. I meant only to say that her stance was Bullish. I did not mean to blur the lines there.

My stocks are easy. But My stocks are also play money that hopefully leads to early retirement.

My Actual retirement is in a 401A plan, and I am just looking for ways shore it up in case you are correct and we do see DOW 8800. Currently I am in the more aggressive funds offered by fidelity, and am thinking of redistributing my money to more conservative funds that may be less severly hit.

dimetzer - there's nothing wrong with cash (usually a money market option in your 401K plan. Your capital will be safe & you'll sleep very well. Then, when te RSI's are nicely lined up, buy the aggressive funds again...

Thanks DaveB.