The new week begins with the bulls on the back foot.

The major indexes -- Dow, Nasdaq, S&P, etc. -- have all tried and failed to reclaim the high ground on their 20-day exponential moving averages. The same is true for closely watched market slices like the Financial Select Sector SPDR (XLF:NYSE) and the Russell (IWM:AMEX).

It’s not that a 20-day moving average holds any special magic. It’s just a useful proxy for short-term strength or weakness. When a market in decline tries to overtake the 20 and falls back, it’s further confirmation that the bulls can’t get it done.

Right now, the name of the game is reducing risk. With all the heavy news out there, investors seem to be pulling in their speculative horns and thinking more about downside than upside. When the bunker mentality sets in, a strong temptation is to just hole up in cash and not do anything.

Cash offers no safety from the ravages of inflation, though. Putting cash in a mattress (or a money market account) doesn’t protect against stealth erosion in the value of money. And heck, these days the erosion isn’t even stealthy anymore; it’s right out there in the open.

Gains During a Recession: More Cuts Ahead

There is a Fed funds futures contract that predicts the next moves of the Federal Reserve. Trading patterns in the Fed funds futures are like a real-time handicapping mechanism -- a bookie point spread system, if you will -- giving odds on the next interest rate move.

Recently, the odds of another half-point cut (50 basis points) for the Fed’s March meeting were priced at 100%. Possibilities of a 75-basis-point cut (three-quarters of a point) were priced above 30%.

The Fed funds futures don’t guarantee what the Fed will do, and the numbers can jump around as events change. But the probabilities represent Wall Street’s best collective guess as to what will happen, and right now the prediction is we’ve got another truckload of rate-cutting stimulus on the way.

That means we’ve got more inflation worries on the horizon, too. The powers that be have essentially decided to “forget” inflation for now. Bernanke and the Fed know full well that pumping stimulus into the system is stoking inflation concerns that are already high. The attitude is “oh well,” the economy is in trouble and they’ve got bigger fish to fry (or rather, bigger fish to rescue).

Gains During a Recession: Always a Bull Market Somewhere

The news isn’t all bad, and the waters aren’t all murky. That old market saw is true: There’s always a bull market somewhere. Heck, even in the Great Depression there were companies making money and industries doing well.

Take precious metals, for example. After taking a short breather, silver is already breaking out to fresh multidecade highs. Based on average daily volatility, gold is only four or five trading days from the $1,000 per-ounce mark. And platinum continues its vertical ascent.

Speaking of platinum, it was less than two weeks ago that reader J.C. wrote in to ask, “So what is the stock to trade to make a play on platinum?”

Gains During a Recession: Stillwater Is Smoking Hot

Ann Sosnowski of Diligent Investor pinged me with a suggestion to check out Stillwater Mining Company (SWC:NYSE). Recognizing a good call when I see one -- most of the time, anyway -- I said sure.

Stillwater was around $10 when Taipan Daily showcased it on January 31 as an attractive platinum play. The company operates in Montana, far from the power-ravaged mines of South Africa.

Less than two weeks after that Taipan Daily mention, Stillwater is up 50% on average daily volume in the millions of shares. (Nothing to do with us, of course. That’s big volume. No thinly traded penny stock this.)

If you caught some of that sweet upside in SWC, congratulations. If, however, you didn’t catch a ride on this particular bullet train, don’t sweat it too much. There will be other opportunities. There always are. Last Thursday, for example, we highlighted Christian Dehaemer’s 69% gain in six trading days on a “bloody and bruised homebuilder.” More will come.

Gains During a Recession: Take the Bull by the Horns

The deeper underlying point is that, in market environments like this one especially, you’ve got to take the bull by the horns.

There are plenty of ways to make money in markets. You’ve got swing trading, options trading, longer-term value investing, technology and growth investing, and so on. Different environments offer differ opportunities, but the opportunities are always there.

There are a few key factors key to making any market approach work. Some of those factors include a cool head, a willingness to learn and prepare, and an intelligent approach to risk.

Gains During a Recession: That’s What Taipan Is About

And really, at the end of the day, that’s what Taipan is about -- helping you make money in an intelligent way.

This is the core of the “safe harbor” idea: building one’s portfolio on a core of low-risk, financially sound investment opportunities, and then using more speculative capital to venture out in pursuit of high returns (just as the Taipans of old used the sheltered waters of Victoria Harbour as a home base for their excursions).

We’ll do our best to keep digging up short-term plays like Stillwater while helping you find safe harbors, too.

Warm regards,

JL