Provided the QQQ remains below the 200 day moving average the market model will be short starting Monday Morning. That said, if the market gaps up above the 200 day Monday morning the market signal will be cancelled. Right now, we are just barely below the 200 day MA on the QQQ and because of the slow stochastics and also the 200 day, the model is short equities here. One way to play this would be to short the QQQ but stay long MSFT, INTC, GOOG, ORCL as a long short play on the market.
There are plenty of cheap stocks around but you have to do your homework. Hedgephone will be much more active this month and we apologize for not being more aggressive in our trading calls (mainly we have been in cash since August).
The USD has traditionally traded inverse to US stocks. After today’s large move higher, we have decidedly broken out of the downtrend written about in last night’s chart study… It is time to be very cautious in equities regardless of 2nd quarter earnings…
Staying short equities with tight stop loss order seems to be a viable and optimal strategy to me… Investors want to focus in on the USD using www.barchart.com to see where the currency market is heading before looking at the stock market….
What is clear to me is that the problems in Europe are worse than we imagined and that this will lead to lower earnings for US multinational stocks… Undervalued companies which are domestic focused should do well even in a bear market for the Euro and for US equities…
Hedgephone’s short signal is now up nearly 3% on the SPY, QQQ, and IWM… We are bearish here, but would set a buy to cover stop order at around .6% higher than we are currently, that way you have locked in a profit….
Always trade with stops on the short side and also try to buy undervalued equities for your long book… following the currency market for equities appears to be the best way to “trade” the market at present.