We used the latest flip flop on Fed policy indicating a surprise tightening to stop out of our long gold trade, capping our losses in an asset class that was clearly rolling over. You don’t want to be anywhere near the barbarous relic during a rising rate environment, no matter how brief it may be.

It should be a boring week of low volume summer trading, as traders sit on their hands awaiting this week’s big economic reports.

A further incentive to do nothing will be the dark cloud hanging over the upcoming June 14-15 Federal Reserve Open Market Committee Meeting.

A rate rise means “RISK OFF”, while no action brings “RISK ON”.

It’s going to be a fairly active week on the data front, despite the shortened four days.

Tuesday morning, the Case Shiller S&P 500 Home Price Index should show continued heady gains in residential real estate prices. Your home could become your top performing asset this year.

The next day, the Fed provides its Beige Book, which should confirm a slow reacceleration of economic growth from the Q1 mini recession. We already got the hint with Q1 GDP revised up on Friday from +0.50% to a still milquetoast +0.80%

Thursday, the weekly Jobless Claims should confirm figures close to 40 year lows. Everyone in the country who wants a job has one, except  your cousin Milton, who never worked a day in his life.

On Friday, we get the big kahuna of the month, the May Nonfarm Payroll Report, which should show a steady 200,000 in monthly gains, keeping the headline unemployment rate to 5.0%. The U-6 structural long-term unemployment rate should continue its grind down into single digits.

As a result, near term trading opportunities may be few and far between. We may levitate at the top of the range for stocks all the way until mid-June, when the Fed shows its hand on its near term monetary policy.

If they don’t move, as I expect, risk assets everywhere will rally. But I don’t think we will break out to new all time highs until August or September. If they take action, risk assets will dive.

My former Berkeley economics professor, Janet Yellen, didn’t give us any help in her Harvard speech on Friday, essentially saying rates will rise somewhere, someday, and now you can all take off for the Hamptons.

Thanks a lot, Janet!

The one interesting thing she did say is that the Fed actually considered negative interest rates as a policy option. That means we’ll get them FOR SURE in the next recession three or four years down the road.

In any case, I plan to be well out of the market by June 13, taking profits on my remaining positions. Those include shorts in the SPY and the yen (FXY), and a long in the Treasury bond market (TLT). I’m deliberately keeping my book small, retaining lots of dry powder for better entry points.

When an upcoming event risk becomes too random, it is better to step out of the market and scale back your risk. Leave the coin tosses to the kids. The CNN Fear And Greed Index is screaming at you that new longs initiated here will end in tears.

If by chance we get the upside breakout now, let your few lucky friends who caught it pay for he next round of drinks. It is a low quality trade.

Sound like a good time to me for a vacation.

Ships Ahoy, and damn the torpedoes!