I have been writing for some time that short term up-trends rarely last as long as the current one has. The media pundits are blaming Thursday’s decline on some weak earnings reports. That is garbage! Did you ever notice that they have all the answers after the market has moved! This decline was baked into the market over a week ago. Go back and read my posts about the weakening DOW stocks and the tiring up-trend. On Wednesday I went mainly to cash and a little short the major indexes (SDOW, SQQQ) with two triple leveraged bearish index ETF’s. For example, on Thursday, as the DOW 30 index declined -1.9%, the SDOW rose +5.6% . Check out this daily chart of SDOW:
One has to be very careful with the 3X index ETF’s because they go up and down three times as much as the underlying index. For now, I will hold my positions and average up if the market continues to weaken. The GMI could flash a Sell signal with another weak day on Friday. With most earnings out, we go into the summer lull, culminating in the weak month of September. The longer term trend of the market remains up, however, and I remain fully invested in mutual funds in my university pension—for now.