Sunday, June 12, 2011

Should we head for cover?

Well this does not look too good.

So what did I see in my weekend review?
The S & P 500 has been down for 6 straight weeks, not a “horrible” amount but down 6.8% The NASDAQ has been down a greater amount.
I can look at a one year chart of the DOW and say that this is a normal little correction with the low points aligning nicely with earlier lows. See chart:
However in looking at the 5-year chart of the DOW it could be the start of a steep downtrend. See chart:
Which is right? I do not know, but we will see in time, so I need to be prepared
IBD (Investor Business Daily) continues their Current Outlook  as : Market in Correction.
Copernicus Systems notes that all three of their Money Flows are now negative and every system they have is bearish. Ouch!
So what should one do to be cautious? Cash is good and getting neutral is probably a good plan.
Those that read this blog (and thanks for reading and sharing this with your friends) know I have been selling recently. 
I will finishing selling and certain I am “neutral” by taking positions in an ETF that is an inverse of the S & P 500, SH.
This is to cover some mutual funds that are difficult to move in and out of (I do not like mutual funds for this reason) and likewise to balance the dividend stocks that I do not wish to sell
If the selling momentum firms, I will be looking at QID, a nifty inverse of 100 largest stocks of the NASDAQ. I will also look at REW an inverse on Technology, and FAZ a wild, wild 3x inverse of Financial Services
Currently my "Stocks for a Trade" now consists of:
None held at this time
ETF's for a trade are:
(All gains or losses shown are the total since purchase)
GLD 6.36%, second purchase 2.77% …down from last week a little
EWG .19% this formally strong Germany ETF is almost underwater, will sell on Monday 
Normal ETF's:
IBB  -4.09% uncle, UNCLE I am out on Monday
Have a great week and I hope the market does turn upward…but hope is not enough

No comments:

Post a Comment