Is This the Summer Correction?

Jun.11.07 | About: ProShares Short (SH)

We think the summer correction could be at hand, though obviously this will only be confirmed in time. The volume of the selloff from Wednesday thru Friday is a good indication.

As we indicated in an earlier post, we are roughly 15% in cash and 5% short the S&P 500 (NYSEARCA:SH). Should we sell off roughly 3%-5% in the S&P 500 from peak we will reverse the short trade. Anything below 5% we will start to work cash back into the markets. We lost ground in May against the indexes, but should start to gain rapidly with the short position on the S&P 500.

We also think the time to exit DBV or lower our exposure could be on the horizon. We continue to stay overweight on large caps with a bias toward growth over value.

SH 1-year chart:

Pro-Shares S & P 500 chart