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What the Easiest Investment System Ever Says Today

By Jeff Clark
Tuesday, November 19, 2013

It's time to break out the pain chart again.
If you've ever spent time in a hospital, you know what I'm talking about. The pain chart depicts a series of faces that range from happy to sad.
The nurse shows it to you when it's time for your pain medication. You point to the face that best represents how you're feeling, and the nurse drugs you up accordingly.
A couple years ago, I introduced the pain chart as an investment system. It's a simple concept that associates the best time to buy and sell stocks with what investors are feeling.
So what does the pain chart say about stocks right now? Let's take a look...
Here's what the pain chart looks like...
pain chart
As investors, we can use a similar chart to gauge our proper exposure to the stock market.
This simple system is based on the proven theory that the best time to buy stocks is when there's a panic... when investors are suffering the most pain. The best time to sell is when investors are grinning ear-to-ear because of the huge gains in their stock portfolios.
A financial advisor could instruct any client, "Please point to the face on the chart that best represents how you feel about the stock market right now." If the client points to a frowny face, the advisor knows it's a good time to increase that client's dosage of stocks.
On the other hand, if the client points to one of the happy faces, the advisor knows it's time to cut back on the dosage.
It is the easiest investment system ever.
With the S&P 500 trading at new all-time highs – up 24% for the year so far and up 8% since the October lows – I'd bet most investors are relatively pain-free.
s&p 500 2013
Gold-stock investors, on the other hand, are probably feeling pain of around an eight or 10. The major gold-stock index – the AMEX Gold Bugs Index – fell 53% from January 1 to its June 26 low... And it's still down 50% for the year so far.
gold bugs index
Please drug yourself accordingly...
Best regards and good trading,
Jeff Clark

Further Reading:

"Nobody wants to talk about gold stocks," Jeff writes. Investors are sick of them. But he says "in this environment, a little bit of buying pressure can spark a massive rally. I suspect that's what we're setting up for..." Get all the details here: We're On the Cusp of a Major Gold-Stock Rally.
If you've never owned gold, this interview with Doug Casey – one of the world's leading gold experts – is required reading: Why You Should Hold Gold.

In The Daily Crux
Market Notes
Small-cap Russell 2000 Index soars 44% over the past year.
The U.S. dollar is the worst-performing major currency over the past six months... down more than 4%.
German stocks continue their uptrend... country fund EWG hits a new five-year high.
Big silver fund SLV sinks to a three-month low.
Market Watch
Symbol Price
S&P 500 1791.53 -0.4% +31.7%
Oil (USO) 33.62 -0.8% +5.3%
Gold (GLD) 122.90 -1.1% -25.9%
Silver (SLV) 19.67 -1.7% -37.0%
U.S. Dollar 80.74 -0.1% -0.6%
Euro 1.35 +0.1% +6.0%
Volatility (^VIX) 13.10 +7.5% -20.2%
Gold Stocks (^HUI) 222.35 -2.0% -49.6%
10-Year Yield 2.68 -1.1% +70.7%

World ETFs
Symbol Price
Japan (EWJ) 12.19 -0.2% +36.6%
Israel (ISL) 16.34 -0.1% +35.5%
USA (SPY) 179.42 -0.4% +34.5%
Russia (TRF) 15.47 +0.7% +14.9%
China (FXI) 39.82 +3.6% +14.6%
S. Korea (EWY) 64.09 +0.4% +13.8%
Taiwan (EWT) 14.07 -0.3% +13.1%
Canada (EWC) 29.63 +0.1% +10.8%
Singapore (EWS) 13.74 -0.2% +10.4%
India (IFN) 20.35 +2.0% +5.7%
S. Africa (EZA) 64.99 -0.1% +3.4%
Lat.America (ILF) 39.35 +0.8% -0.8%

Sector ETFs
Symbol Price
Alt. Energy (PBW) 6.54 -1.8% +88.1%
Biotech (PBE) 35.41 -1.2% +59.6%
Media (PBS) 24.65 -0.9% +58.5%
Defense (PPA) 29.51 +0.4% +53.8%
Transportation (IYT) 128.52 -0.3% +49.6%
Retail (PMR) 35.35 -1.6% +47.4%
Industrials (IYJ) 97.02 -0.1% +43.6%
Consumer Svcs (IYC) 117.37 -0.7% +43.1%
Health Care (IYH) 113.46 -0.5% +41.4%
Financials (IYF) 77.61 -0.1% +38.2%
Semis (PSI) 17.77 +0.3% +37.9%
Big Tech (QQQQ) 83.14 -1.0% +35.3%
Construction (PKB) 21.11 -0.9% +34.2%
Water (PHO) 25.30 -0.4% +33.4%
Software (PSJ) 34.13 -0.7% +31.4%
Telecom (IYZ) 28.88 +0.2% +29.9%
Nanotech (PXN) 6.92 -0.7% +28.2%
Basic Mat (IYM) 78.56 -0.8% +25.6%
Utilities (XLU) 39.32 -0.1% +19.1%
Insurance (PIC) 19.01 +0.1% +18.3%
Real Estate (IYR) 64.39 -0.7% +8.2%

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