Stocks, Stock Swings, Options, and Option Trades

   Disclaimer: Consult a Financial Advisor prior to taking the advice offered. By reading this blog site you agree to not hold any authors or responsible for market loses that you may incur.

 Subscribe in a reader

Subscribe to FastSwings by Email

Reduce equities, Keep some cash, and Hedge.

Feb 15 2008

Reduce equities, Keep some cash, and Hedge.

When the market is in a down trend it makes sense to balance not only your stocks by sector, but the amount of cash you have and the amount of hedging in your account. I am currently 25% in cash and 25% hedged with Dow Jones 30 Inverse by Pro Shares (DOG) which matches the inverse of the Dow Jones 30 dollar for dollar.

I am not a big fan of the Ultrashort ETFs as they provide too much movement when the market does have a rally of a couple of days or a week. These ETFs provide double the inverse of a particular index or sector. So when the Nasdaq rallies 4% over the course of three days like we say recently, the Ultrashort QQQ (QID) would lose 8% of it’s value. That is too much movement if you’re not watching the market daily and/or have high commissions to pay when you move in and out of positions.

ProShares offers as many single inverse and they offer Ultrashort/double inverse ETFs. is a listing of all the single inverse ETFs that you can add to your portfolio to hedge against downside movement when the market is in a negative chart formation. Short QQQ (PSQ) and Short S&P 500 (SH) would be my recommendations after the Short Dow30 (DOG).

Our FaceBook Page

Market Summary