Do I dare
Disturb the universe?
In a minute there is time
For decisions and revisions which a minute will reverse.
-T.S. Eliot, from “The Love Song of J. Alfred Prufrock”
My “August 4, 2010” commentary had to do with the question of whether the most recent rally was for real or just a minute snap-back within a just-started downward trend. There were some stocks at the time exhibiting leadership and, if that list would expand, I illustrated what one might expect should the rally turn out to be a second leg higher in an ongoing and larger uptrend. However, I wrote that to answer the question keeping things simple and focusing on the day to day action of the market was the best bet.
Fast-forward to today: the current evidence suggests that the rally is in fact dead and that lower prices ahead are quite probable. Many of those leading stocks got mauled in recent days and, beyond that, an expansion of that leadership just never materialized. So we change our stance, protecting our capital and/or gains, and look to position ourselves with the market’s prevailing trend.
I’ll be looking once again to the inverse ETFs that are “on steroids,” stuff like TZA, SQQQ, SPXU and maybe even something like EDZ. Short targets would be the usual suspects: V, MA, JPM, AAPL, BUCY, AFL, LNCR, AMZN, RIMM, etc.
A watchlist of the very best stocks will still be kept up-to-date, of course. You just never know. After all these decisions and revisions, it only takes a minute for the entire universe to reverse….
Disclosure: No positions