Cover all short positions at this time. You should have profit in your TZA and BGZ trades for those of you who took advantage. While we still believe this market is headed down we may get a better buying position on our short trades in the next few days.
It's time to sell all of your remaining equities or funds within your family of funds that have equities in your retirement accounts. The risk is just too great. You could wake up some morning and see the DOW down a thousand points or more. Those of you with 401K programs move your money into short term money market accounts. Those of you who have IRA accounts, self directed IRA accounts or trading accounts who can purchase Exchange Traded Funds put 50 % of your position in TZA or BGZ. These funds will go up in value as the market goes down.
Those of you who have retirement accounts in mutual funds should consider selling those funds and purchasing 30 T-Bills if and when the Dow returns to 11,600 to 11,750. It has an 80% chance of not closing above 11,750 two days in a row when it gets there and at that point returning and taking out the previous low which could be the low you are seeing now the week of 07/13/08. It would also be wise to purchase Bear funds that go up in value as the markets go down. So if you get a chance to sell when the Dow reaches those levels I highly suggest you do so. If I'm wrong and the 20% close above 11,750 does occur just simply buy them back. You would then be looking at possible new highs on the Dow, leaving very little on the table but knowing your going higher.
Congratulations to those of you who took our advice the first week of July and sold your Mutual Funds from retirement accounts. Depending on which funds they were you are 40 to 60% better off than those who didn't. You now have 100% of your retirement to reinvest when the time is right and it's getting close. For those of you who took our advice and bought Bear Funds, another congratulations. Our recommendation of purchasing SDS on July 17th at 69.50 is a big winner. SDS as of 10/10 went as high as 128.91 and closed at 110.88. By taking our advice some of you have made 40 or more points on the market going down in less than 3 Months. How's that for an annual return? Now it's getting close to reversing the position. We fully expect our forecasted objective of 7,500 on the Dow to be met and then some. But if these markets are going to survive and we believe they will, the Dow will find major support at 7,200. It doesn't matter if it goes through that number for a short time because that's where Big Money will be buying everything they can get their hands on. The problem is the market may not stay down there long enough for you to purchase what we recommend so here is what we suggest you do. As the Dow goes through 7,500 down to 7,200 we highly recommend purchasing Large Cap, Blue Chip Funds to go back into your retirement accounts. If you are able to buy individual stocks we have narrowed down a few that are heavily oversold and will move 10 points or more very quickly. They are BAC, GS, C, SPY, SOHU, ZOLT, GE, MSFT, T, DIA, XOM as long as crude stays above 78.50, HD, UTX and DD to mention a few. SDS and SKF were good buys as the market was coming down, they will be excellent sells as the market goes up. We believe 7,200 on the Dow will become a major base for years to come so just as selling everything when the Dow closed below 11,750, it is now time to buy everything as the Dow approaches 7,200. As mentioned earlier it is possible to penetrate 7,200 and go down to the 6,600 or so level because of momentum but over a very short period of time it will return and close above 7,200. So don't worry if it goes through 7,200. Just look at it as being another buying opportunity. If for some reason or another the Dow opens below 7,200 BUY, BUY, BUY you will never get an opportunity like that again.