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Time to "Flip" Financials
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Patience, staying the course and following your plan usually reaps benefits in life. Investing is certainly no different in that regard. I have targeted one weak area in the market and two rapidly rising areas of the market for using ultrashort ETFs. As might be expected, the weak area of the market, financials, has now reached my target for the short ETF. I will be selling out all of my ultrashort financials tomorrow. I will also, if the market starts weak as I expect, add key financial names so that I, in effect, will have "flipped" my financial stock exposure. Be aware, If you try to play "both sides" of a trade, you will usually miss time the "flip" and be too early on the other side of the trade. Because of this, I will not go in full force with financial stocks. I plan to buy a small amount of the four best financial names for this difficult market. In my view, if you would like to START to dip into financials, I recommend BAC (Bank of America), GS (Goldman Saks), JPM (J.P. Morgan/Chase), and WFC (Wells Fargo & Co.). Investing in any financial stock is not for the faint of heart in this "bearish" environment for financials. Still, financials have been beaten up in a major way and will, eventually, turn. When that will happen, I do not know. However, as I have with my other trades, I feel that the risk/reward ratio is now favorable enough to begin dipping in. As far as my other ultrashorts (Nasdaq and Oil/Gas), they were purchased to take advantage of a trend reversal and not a long-term statement about the Nasdaq or Oil/Gas. I plan to remain patient, stay the course, and follow my plan with those investments as well. I might add to my ultrashort Oil/Gas soon if I get a better price entry point. I am not giving up and expect Oil to correct as the dollar strengthens and demand weakens in the short-term. Once that happens, I will sell my ultrashort. I will not add to the Nasdaq ultrashort unless the price improves considerably. It might be a month or so before I sell those positions as the correction in Oil has certainly not occurred. Until next time. Doc | ||
