I continue to be very uneasy about the market and believe it could begin trending lower at any time, so my natural inclination is buy inverse exchange-traded funds (ETFs). These are baskets of stocks that move higher when the market moves lower. I gave you a great inverse ETF a couple of weeks ago, ProShares UltraShort S&P 500 (NYSE: SDS). I recommended this ETF because my systems were telling me then, and they continue to tell me now, that this market could move lower in the near term -- perhaps a lot lower. But, what did the market do last week? It moved high enough to stop us out of the SDS trade.
But remember: I am a rules-based investor. I have rules for getting into a position and rules for getting out. The rules for getting in are still flashing "Short!" But just because I have a rule that tells me when to short the market, it doesn't mean that I ignore my rules for getting out of a trade.There is an old saying that the market can remain irrational longer than you can remain solvent. One of these days, the market's trend will reverse and I am afraid that it will not be a happy ending. (more)
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