The Last Selling Opportunity of 2012?
We have been saying the market would fall 20% and that would give us another 10% move downward from here. Futures had a drastic reversal overnight and went positive early this morning, is it a turning point for the market? Were we wrong?
The market is creating a selling opportunity for investors, and quite possibly the last opportunity to sell your long positions at these levels. Look at the news around the world, India is mired in a deep slowdown, China is mired in a fiscal mess and slowdown, Greece IS leaving the Euro, Spanish yields are already at unsustainable levels, the US is looking at deficit ceiling issues and tax break expirations and there isn't a single central bank in the world that is politically or fiscally prepared to continue with mass bailouts.
We also predict a flight from fixed income and treasuries as the yields have fallen to levels that won't even keep up with inflation.
What can you do?
As we have stated before, we love being long the FXP, (ProShares Ultrashort China). We love BGZ (Direxion Daily large Cap Bear), as well as SDS and SH (which is a non leveraged Short product).
If you are against the short or leveraged products, or only want to be long, the only plays that make sense are high yielding equities of blue chip companies ( although the equities prices will fall) and preferreds that are not callable for at least a year. MMM yields almost 3%, IBM yields almost 2%, and in the ETF sector you have AMLP yielding about 5.6% after expenses , MLPA yielding about 6% after expenses, SDIV yielding about 7.2% after expenses, DVY yielding 3.1% after expenses, HDV yielding 2.1% after expenses and then the High Yield ETFs such as HYLD at 8.1% before expenses and HYG yielding 7.5% before expenses.
We believe that HYLD, HYG, AMLP, MLPA, SDIV, DVY need to be in your portfolios for the next three months at least, and if you can be more aggressive, add in FXP, and any of the short products for the major market indices.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.