With Friday's surge in the market due to the unemployement numbers, stocks are looking a bit "toppy" at this time. At this time, I feel it's a better move to take profits, raise cash and sit on the sidelines.
The SPX, the DOW and the NASDAQ are all sitting at or near their highs posted in January. To me, it's a strong probability that we will touch those highs and then retreat a bit, perhaps even as far back as the 50-day moving averages. A pullback of this nature will offer us a chance to enter some new positons at "value" prices.
For those interested in a hedge, I suggest looking into buying some put-side protections (volatility has swung lower recently), or you could pick up shares of the SDS (ProShares Ultrashort S&P 500). On Friday, it touched the lows hit in January, and then you can guess what happened from there.
Obligatory disclaimer: Past results do not guarantee future performance. The suggestions above are simply suggestions and the blogger is not liable for any losses incurred as a result of actual investment activity on the part of the reader.
Be Cautious and Happy Trading!
The Queen of Charts
Saturday, March 6, 2010
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