The early market rally was driven by good news (well at least it was perceived as good news) out of Europe and a better than expected weekly jobs number. The early rally began to subside within 20 minutes of the opening bell and struggled the remainder of the session. With the S&P 500 deep in the red with an hour left in trading (-0.8%), it appears the market will continue its swoon into Friday.
Even though the S&P 500 has remained within its trading range it has been forming over the last 2 months, the action has been far from bullish. I am not liking the late-day selling and it appears the news out of Europe is not what investors are looking for to calm their fears. Therefore I believe lower prices are ahead in the short-term. However, if looking out 6 to 12 months I do believe the market will be substantially higher.
So the strategy now is to hedge any future short-term weakness with increasing cash positions and/or investments that do well in market sell-offs. There are Inverse ETFs, shorting stocks, bonds, currencies, and defensive sector ETFs.
We will be sending an Important Update to our clients and subscribers tonight with more detail of our plan going forward.
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