My watchlist is small this week. Probably as small as it has been all year. However, I may take some of the biggest position sizes I have taken in quite some time (while still managing risk appropriately). Here is the list:
I am monitoring leveraged index long ETFs such as SSO, DDM and QLD. While I am already long the S&P via SSO, I may add even more to the position.
I am monitoring high flying commodity stocks as shorts on a bounce. Sectors of interest include coal, steel, ag and energy. I went long DUG on Friday, which is a leveraged energy short.
I am monitoring financials and may short stocks such as MS, LEH and GS on strength. I went short LEH on Friday, but only took a small position as there is still more room to bounce.
That’s basically it for the watchlist. I almost feel like I haven’t done enough work, but this is really all that interests me right now, and I feel strongly about my current market thesis.
I have received many e-mails about my recent comments with regards to the expected bounce. A few seem to think I am predicting a market reversal. If I’ve lead any of you to think that is my market thesis, let me make myself clear. I am only positioning myself for a market bounce. I am not predicting the end of the downtrend. In fact, if we do get a bounce and it nears resistance, I may establish short positions in the indexes.