Check out the video about our thoughts on today's stock market action.
Tuesday, March 6, 2012
Morning Stock Market Commentary - March 4, 2012
U.S. stocks will open significantly weaker this morning, with S&P Futures off about 12 points as of 8:30 am ET, and Dow futures off near 100 points. This would be about the weakest open for the year. The trend so far this year has been for the market to then bounce for the rest of the day and close well off the lows. We have not yet had a trading day in 2012 where the Dow closed down 100 points or more. This morning's weakness may be attributed to weakness in Europe markets this morning on the back of weak economic data. Also, estimates for GDP in China have been lowered as well.
I actually took out insurance on my portfolio yesterday by buying a couple ETFs...one is the TVIX, which mimics the VIX, or volatility index. Volatility has been at very low levels for much of the year, and on a daily basis has been contracting as well. The other I purchased is a small cap bearish ETF, TZA. The Russell 2000 has underperformed the big cap averages for most of the year, as Apple has been masking the underlying weakness in the overall market.
Watch out for a true selling day today, or in the near future. If the major market averages all close with losses over 1%, then you have a likely change in direction from here. This is by no means a perfect indicator, and could easily be reversed, but most sell-offs will have a day like this at the beginning of the sell-off.
After a significant rally from the October lows, it is time to play defense.
Scott Cole
www.whentobuyandsellstocks.com
I actually took out insurance on my portfolio yesterday by buying a couple ETFs...one is the TVIX, which mimics the VIX, or volatility index. Volatility has been at very low levels for much of the year, and on a daily basis has been contracting as well. The other I purchased is a small cap bearish ETF, TZA. The Russell 2000 has underperformed the big cap averages for most of the year, as Apple has been masking the underlying weakness in the overall market.
Watch out for a true selling day today, or in the near future. If the major market averages all close with losses over 1%, then you have a likely change in direction from here. This is by no means a perfect indicator, and could easily be reversed, but most sell-offs will have a day like this at the beginning of the sell-off.
After a significant rally from the October lows, it is time to play defense.
Scott Cole
www.whentobuyandsellstocks.com
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