Time to Give Up?

The crawl is over, and the shakedown begins. Is that where we are at? It's starting to look as if that last push higher was the great escape. Although not written in stone yet, enough troubling signs have appeared to worry most folks. Three of the nine major sectors finish below the August lows yesterday. Add to that the Dow Jones Transportation Average, which is under those same lows. Does that mean we can't bounce again? No. In fact, the odds are pretty good that we will today, but it does mean that the handwriting remains on the wall, and that the scribbling says to for lower prices over time.

So, do we just sell everything and give up? Well, that depends on how you trade. Personally, I would rather buy the good stocks as they get cheaper and trade around the core positions, while hedging them from time to time. These last few days have been tough if you were strictly long, but if you were hedging with inverse indexes or options or whatever it is that you care to use, then you could have remained reasonably flat while adding a little more size to the portfolio. That is true at the current price levels and will be true at lower price levels. Eventually there will be a price level that has the markings of a real bottom and at that point, you simply don't add hedges back, and the portfolio you have slowly built and traded around can do some heavy lifting....566 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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