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After a bullish run to end November, the markets welcomed December with a big, fat meltdown. Many traders have become more constructive, but today shows why risk management is still the key. You may be tired of my saying that. I don't blame you, I'm tired of thinking it. I'd like to see a bull market where we could talk about taking risk rather than managing it. But alas, this is the market we have.
It remains to be seen whether this is the beginning of a new leg down, or a sharp pullback in a bear market rally. It doesn't really matter to me--I have stops that tell me when to get out of my positions. Many of them were triggered today, but 2 positions remain on my books: Amgen (AMGN) and Emergent BioSolutions (EBS). Frankly, I'm barely comfortable holding these, but the relative strength today has kept me in the names for now. Here's today's chart of AMGN and EBS compared to the S&P 500.
I was actually looking to buy the Ultrashort Real Estate ETF (SRS) today, but didn't get even the slightest pullback to do so, nor was I at my computer at 3pm when it really started to roll. Holders of SRS made 35% today! Something to consider: In a bear market, isn't it better to be consistently looking for short entry points rather than long entry points? Here's a chart of SRS from the past 5 days. However, it's notable that even with the move today, SRS is not back to where it was last Monday. Timing is everything on these ultra ETFs.
Disclosures: Long AMGN and EBS
See more at www.thestocksurfer.blogspot.com
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