Go home flat into the long weekend; Gold circa 1723

As we close the week out, we are essentially unchanged from where we were when I wrote on Tuesday. I had said that I favored being short. We pushed higher towards 1740, and then made lows near 1706. Each time it looked like we might break out or break down we came back to this area where we now sit. Options are getting sold as we seem to be stuck for the time being. But while my bias is and likely for some time will be to the upside, I would go home flat, and be careful to pick my spots in the upcoming week.

Reasoning? The markets are reacting to Greek headlines. Right when it seemed like we were poised to break down to 1700 and every CNBC contributor was warning of imminent market doom, Greece started making promises. And we, and by we I mean equities and commodities rallied. While 2012 has been a nice headline-light grind higher, seeing markets react to Greek headlines concerns me. In 2011 on average hedge funds, the so called "smart money" under-performed the indices by approximately 6-7%. I attribute this to a number of things, but I mention it to point out just how hard it became to trade in such a headline driven market. Do you remember how headline driven 2011 went? The most brilliantly constructed position could turn bad on the drop of a dime, or a meaningless promise by a soon to be obsolete Greek politician. Then a "high ranking German finance minister" or someone with a similar title would say something that stirred markets, only to never be addressed again. And to top it all off, we had a number of situations where the pundits reported news that moved markets, only to later have to admit that the story they broke was untrue. Some market.

I hope that we will soon again put Greece on the back-burners so that the market can resume its steady climb higher. But for now, the risk of trading from either the long or short side, when we are seeing evidence that headline risk is re-emerging is simply a losing battle. Come next week, we may find that the market is no longer reacting to headlines, in which case I'd say dive right back in (and of course be long). But smart investors know that sometimes the best position to have is no position at all, and I think that is the prudent move now.

Have a Great Extended Weekend.

Ben