A tough combination for traders which is why we are on the sidelines at Hedgephone.com — We are fine with a flat year so long as we can find that one high probability trading set up to make a nice 8-12% yearly return from. Currently, the market is still overvalued and over-loved yet as we discussed here yesterday, on a technical basis the market is very oversold.
In this case, we have no real crystal ball except that summer trading is done on thin volume and means very little in general as all of the “big boys” are in the Hamptons. In our view, that’s a fine place to be as the opportunities to trade here are few and far between. We will update as stocks get cheaper — the lower they go the better they become from an investment/value standpoint and the more we become interested in them. All in all, we think the S&P is fairly valued at around $1050-$1100 so we wouldn’t step in front of the current down leg just yet…
In another 20%, I am sure we will have a lot more to talk about at Hedgephone!
For now, consider the following short ideas: These “leaders” could soon become the laggards if this is the start of the next bear market crash for equities.