Many of my Profitable Investing subscribers are getting a bit weary of the mediocre numbers their retirement accounts have cranked out over the past two years. Is now the time to spice things up -- say, by adding a small-cap mutual fund to the mix?

My answer, brief and direct: Not yet. I can certainly understand their frustrations. After all, for the two years ended January 31, an account divided between a government bond fund, a U.S. stock index fund and an international stock index fund should have returned about 7% annually. That's pretty slim pickings compared with the bountiful harvest we grew accustomed to in the 1990s. But it's still a positive return, with only a modest degree of risk.

If I were to make any suggestion, it would be to consider switching out of the government bond fund and into a guaranteed fixed account. (Many retirement-plan sponsors offer this option.) However, I would hold off making even this move until the 10-year Treasury yield dips back to 3.6%.

The tenner closed at 3.86% today. Chances are, we'll see it back at 3.6% (or even a tad less) when the stock market gets around to "testing" its January low, probably sometime in the March to May time frame.

What about the small-cap idea? Too risky right now. Despite occasional bounces, small caps have lagged their blue chip brethren since April 2006. I wouldn't mind shoveling some money into small caps once I'm reasonably sure the market has made a solid bottom. For the time being, I'll probably stick with relatively large, household name companies.

For traders, I'm beginning to smell an opportunity to play the market's next (and, let's hope, last) leg down. Ideally, the Standard & Poor's 500 index should climb above its February 1 high of 1395, and then stall. That would be our signal to probe the short side, most likely through put options on the S&P index itself. Stay tuned!