I feel underweight in 'portfolio insurance' so I continue to funnel money in UltraShorts - some more Russell 2000 (TWM) and Real Estate (SRS).
Until we go meaningfully lower or clear S&P 1490 I remain bearish short term - the punishment in stocks like Crocs (CROX) today is quite breathtaking considering it is approaching 50% off its high just from 2 weeks ago. Astonishing. It is actually getting darn cheap for its growth, but sentiment is awful in retail. The retail stocks, apparently had NOT bottomed out. (apparently Kohl's must have off balance sheet CDO's on their books?) Hence that is worrisome - along with the teflon stocks going bad this morning. And financials are not at least getting a dead cat bounce? Nothing? All these things make me concerned, so I need more insurance to the downside to buffer in case we continue down.
For the S&P500 the 200 day moving average is 1483, which is the top range of the day today. NASDAQ has been our last real leadership, and that index is flailing off the Cisco (CSCO) commentary - remember the whole case for tech is its immune to credit issues; but Cisco cited financials and automotive as slowing down their capex spending. I think automotive will be yet another shoe to drop as consumer confidence continues to wane. Again, none of this seemed to matter most of the past few months - everyone was just happy about Fed cuts. And maybe in a day or a few hours it won't matter again. But I have been a bear on the domestic economy since day 1 of the blog so when the market finally gets around to recognizing it I don't want to be 96% long....
If we break back above these technical resistance levels mentioned above and you see strength in the teflon stocks I will reverse my near term thinking. For now, despite the market sort of hovering in a narrow space, continued caution in the near term is in order.
Long Ultrashort Russell 2000, UltraShort Real Estate, Crocs in fund; long Crocs in personal account.
