[Weekend Summary]
Dear Member:
The first few days of 2008 have hit the bulls hard. The Dow Industrials, S&P 500, and Nasdaq Composite have all fallen below their important 200 day moving averages. Each is coming toward a very critical level of support. The next Dow support is around 12,724, the Nasdaq around 2540 and the S&P 500 about 1406. If these levels are broken, it could be a very unpleasant ride for bulls and those who advocate buy and hold no matter what. There is a great deal of speculation about the Fed reducing interest rates another 1/2 point in January and that may serve to stem the tide, but there are still huge credit problems out there. As I have said and written before, if we think there is a problem with the sub-prime mortgages, wait until consumer debt catches up. There are already signs of borrowers falling farther behind on consumer debt and that certainly bears watching in my view. All that having been said, there are plenty of ways to profit from downturns and I have used some to my advantage this past week.
The first trading days of the year have made me thankful I stayed away from too many bullish positions. Ceragon (CRNT) which had done me no favors has turned and is moving up in the face of diving markets which is quite bullish. In fact, it moved up nearly 7% today on very good volume.
Evergreen Income Adv Fd (EAD) also is moving up against general market direction and continues to fulfill its function in my portfolio as an income producer.
I try to keep a position in ProShares UltraShort QQQ (QID) as a hedge which is intended to move up at twice the amount as QQQQ moves down. It has definitely been working and it along with DXD and SDS are on the radar screen for next week. Each affords the chance to profit in a downward move so they can be appropriate Trend Trader positions. I'm looking for a break through resistance to buy or add to positions. A break through resistance on these ultrashort ETFs equates to a fall through support for the actual indices. In other words, if the Q's fall through the next level of support, QID would be breaking up through resistance at the same time.
Thank you for subscribing. Trend Trader was the most successful service for me in 2007. Of the 35 trades I closed, 33 were winners and I have now closed 26 winners in a row in this service.
Have a great 2008!
Bill
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