Monday, June 20, 2011

Terry's Question: Opportunity in a Bear Market

One more thought for Terry--If you want to make money with low risk and high reward in a Bear Market, why not short the S&P 500 Index? Whenever the S&P 500 Index hits the downward sloping 50-day moving average on a daily chart, go short with the spiders ETF (SPY). As long as we are in a Bear Market, I (must...not...say...guarantee/smile) assure you that you will be trading wisely. Better yet, whenever the S&P 500 Index stochastics on a daily chart return to an overbought condition, (above 80), go short! (must...not...say...like...taking...candy...from...a...baby.../smile). In my experience, those trades (shorting an overbought market in a down trend) are as close to sure profit as you can get on God's green earth.

I've been thinking about Terry's question more and more. Maybe, I will set up a hypothetical portfolio for Terry from June 21 to November 21. My goal would be to earn 100% profit in real time in a Bear Market. If I have the time and if the day job permits, I might set it up....That might be fun for our Club members.

Anyway, Terry, I'm an overworked lazy toad at times. I was content to just beat the S&P 500 Index by year's end. Might as well have some fun and show off my skills in the process/smile.

We'll see.....

Your inspired lunch time writer,

Wink

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2 comments:

  1. Wink

    Greatly appreciate the response. I am afraid I am a bit new to risk trying the short with real money but, I do think I will do some paper trading and see how it works out.

    Thanks for the advice in the earlier post. I bought a small position in EP, we will see how it works out.

    I have been basically swing trading and claiming small profits starting 8 weeks ago. So far it is going ok, up 11%. (fingers crossed)

    Thanks
    Terry

    ReplyDelete
  2. Nice. Let's see how Terry's model portfolio works out in real time too. Make sure you have a stop loss in place with EP. I looked at the market's action last year at this time.

    If the general market drops into July 1, then so should EP but less so. I still feel it is more a defensive play than an aggressive money maker but see what happens. Remember how Nicholas Darvas would limit his losses and let his winners ride? It depends upon your mindset.

    Now, another way to go would be the ultra short funds like QID. If the market drops, then QID rises at twice the rate as the market drop. Just something to think about.

    EP is a defensive play. QID is an aggressive play.

    Later,

    Wink

    ReplyDelete