[Weekend Summary]
Dear Member:
Today looked more like the capitulation that I have been suggesting is due, but I still am not sure that we are there. The major averages fell fairly dramatically today on strong volume but my best guess is that we will see further downside and at least a testing of the intra-day lows in January before a return to the bull. At times like these I believe that there is even more reason to be aware of the risk control and risk aversion techniques set out in my book "Trade Your Way to Wealth." Those who know and use some of those strategies are less likely to suffer the significant losses of principal such as those experienced by so many in the 2000 crash and aftermath when the tech bubble burst.
As indicated in the first paragraph, I remain cautious overall. The UltraShort S&P 500 ETF (SDS) rebounded this week as the market continued to tank. SDS can be a nice hedge and provide good profits in a down market. I continue to believe it is a very worthwhile position in this market climate.
Not only does Evergreen Income Advantage (EAD) provide regular income, it often moves opposite the market as it did this week, making a relatively decent price gain.
Ceragon (CRNT) remains a disappointment, but does provide a vehicle for writing covered calls and may ultimately give me an unintended blessing by becoming a capital loss to help with the 2008 tax bill.
Have a great weekend and thank you for helping to make "Trade Your Way to Wealth" a success.
Bill
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