You can't write the script any better. Energy prices are falling (Remember the "Magic"), and so are commodities, gold, and interest rates. What a beautiful sight!
Almost daily we are hearing great news on energy and how are problems of the past 9 months are coming to an end. Of course I believe these solutions are only temporary, but for now, the "magic" is working.
You do remember my articles about the "magic", don't you?
Say What You Will...But It Is Like Magic!
Energy Prices Falling: Are We Puppet's ?
More Magic: Crude Oil Inventories & BP's Pipeline
In the first few days of September, CNBC and Bloomberg were warning us that this is the worst month for the stock market. Now that the cats out of the bag, and millions of investors have positioned themselves accordingly, I think its time to prepare ourselves for a year-end rally. This rally could be pretty impressive, but I don't want to get caught up in owning a portfolio of 25-30 stocks to capture the possible upside.
So, what do we do?
I am going to stay with my positions in the UltraShort ProShares for a few weeks anticipating that the downside will be mild. I don't think the market will focus on the possibility of an economic downturn until after the November elections. By election time the news we hear may be so good that the S&P could rally back to 1350 or higher, and the Dow could hit 11,800. After the rally, I will buy back the UltraShort funds.
Target downside:
SPX: 1290-1270
Dow: 11,100-10,700
Nasdaq: 2100-2025
Once we enter each trading level, I will be looking to slowly exit the ProShares UltraShort funds, and begin purchasing the ProShares Ultra Bull funds;
UltraShort Funds:
UltraShort QQQ ProShares(QID)-Double the inverse of the NASDAQ-100 Index
UltraShort S&P500 ProShares(SDS)-Double the inverse of the S&P 500 Index
UltraShort MidCap400 ProShares(MZZ)-Double the inverse of the S&P MidCap 400 Index
UltraShort Dow30 ProShares(DXD)-Double the inverse of the Dow Jones Industrial Average
Ultra Bull Funds:
Ultra QQQ ProShares(QLD)-Double the NASDAQ-100 Index
Ultra S&P500 ProShares(SSO)-Double the S&P 500 Index
Ultra MidCap400 ProShares(MVV)- Double the S&P MidCap 400 Index
Ultra Dow30 ProShares(DDM)-Double the Dow Jones Industrial Average
Oil and Commodities will remain good long term investments, but over the short term they will undergo a stiff correction.
