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Going into Friday’s trading all of our indicators were still in the green; although the market internals gave us an early warning on Thursday. Despite big gains, the number of companies setting new lows Thursday outpaced new highs on the NYSE (NYSEARCA:NY), NASDAQ (QQQQ) and the S&P (NYSEARCA:SPY).

After GE (NYSE:GE) disappointed Wall Street and investors alike, 2 of our most important indicators moved into sell territory. Our Momentum and Market Leadership models are telling us to be more cautious moving forward.

We believe the GE hangover could last a little while. Many banks are set to report their earnings this week and we are not too confident the likes of Citibank (NYSE:C) and Wachovia (NASDAQ:WB) will provide the medicine the market needs.

The Correct Call recommends taking some money off the table until conditions improve. We would lighten up or sell index related ETFs, like Ultra QQQ ProShares (NYSEARCA:QLD), PowerShares QQQ Trust (NASDAQ:QQQ), iShares Dow Jones Transport (NYSEARCA:IYT), SPY and Ultra S&P500 ProShares (NYSEARCA:SSO). We would continue to hold the industrial ETFs PoweShares (NYSEARCA:PRN) along with the Dividends Achievers portfolio (NYSEARCA:PFM).

More aggressive investors might consider moving some of their dollars into ETFs that go up when the indexes go down:

  • ProShares Short S&P 500 (NYSEARCA:SH): objective is to produce the inverse of the S&P’s performance. For example, if the S&P moves down 1%, SH should move up 1%.
  • ProShares Ultra Short S&P 500 (NYSEARCA:SDS): objective is to produce the 2x the inverse of the S&P’s performance. For example, if the S&P moves down 1%, SDS should move up 2%.
  • ProShares Short QQQ (NYSEARCA:PSQ): objective is to produce the inverse of the NASDAQ 100’s performance. For example, if the NASDAQ moves down 1%, PSQ should move up 1%.
  • ProShares Ultra Short QQQ (NYSEARCA:QID): objective is to produce the 2x the inverse of the NASDAQ 100’s performance. For example, if the S&P moves down 1%, QID should move up 2%.

Disclosure: none

Source: Investment Advice for the GE Hangover