Market Matters

Buy DXD and SDS,
These 2 ETF's will save your portfolio. Let me start explaining why by giving my opinion on the stock market. (see picture)

I have to say that I agree with what most of the talking heads are saying about the market. Let me drop a few links before I continue.

http://www.investors.com/

http://www.financialsense.com/

http://articles.moneycentral.msn.com/

http://www.thekirkreport.com/

well, that's the tip of the iceberg and I'm sorry to say that I can't post the best articles, since they are paid subscription services. If you do have a subscription to Barrons, TheWallStreetJournal, or Investors Business Daily then you can connect the dots yourself.

Onward to charts: Weekly Chart of DJIA

• This is a 3 year chart showing a divergence on the peaks, while the bottoms are a bit more neutral
• The MACD at the tail end of this chart shows a good possibility that it will soon cross the 0 line.

Daily Chart of DJIA

• A resistance line is right above the current price
• The Slow Stochastic shows a clear trend. As you can see each time it crosses that 80% threshold, the index dives.
  

This promising daily trend is what I believe will end up pushing the weekly MACD to cross the 0 line. So aside from charts, what else do we have that could throw a wrench into the cogs of our slowing economy?

Rising Oil prices
Avian Flu Pandemic
Iraq War
Israel-Hezbollah War
ANOTHER Rate Hike (probably not likely)
End of Housing ATM
Hurricanes

So what do you do when you believe the market is going to turn sour? Well some genius came up with the idea of an ETF that short sells the Dow Jones 30 and another that shorts the S&P500 index. Not only that, but the two ETF's double the volatility. What does that mean for you? Double the profits. (or double the losses)
ie: If the DJIA goes down 1% on the day, the DXD would go up 2% that same day.

This is an excellent tool to hedge your portfolio against the risk of a fall.

Worst case scenario: The DJIA gets positive again and surges to 11600, forming a double top that no investor would touch considering that the % return consensus on the DJIA this year is in the single digits. If that did happen, it would likely come right back down very quickly.

These "double inverse ETF's" are brand spankin' new, and have been out for 14 days. Use with care, however, because they are more volatile. Buy the UltraShort Dow 30 ProShares and/or Buy the UltraShort S&P500 ProShares.

Confidence Rating: 4/5 Stars
(Full disclosure: I will buy shares of DXD tomorrow)