Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

It's Time to Get Defensive on Stocks and the Global Economy


These charts help explain why it's time to get short (or hedged) for a sizeable downside correction.

They say a picture is worth a thousand words -- and probably worth 10,000 of my words -- hence I'll only say a few of them. It appears smart money is ready to start discounting a global economic slowdown based on the charts displayed below. As you might know, the market prices in today what is expected six to nine months down the road. Seeing economically sensitive sectors top out and roll over like today, I get incredibly nervous. Let's look at some charts to understand why it's time to get short (or hedged) for a sizeable downside correction.

Let's start with China. It looks like this global economic juggernaut has topped out and is ready to head south.

iShares FTSE China 25 (FXI)

Click to enlarge

ProShares Ultrashort FTSE China 25

Click to enlarge

Next let's look at the economically sensitive steel sector (Dow Jones US Steel (^DJUSST))

Click to enlarge

And the non-ferrous metals sector (Dow Jones US Non-Ferrous (^DJUSNF)) is also rolling over. Another bad sign for the global ecoconomy:

Click to enlarge

And the rails are rolling over, too. This sector started down as the Dow Jones Industrial Average was hitting new 52-week highs on February 29 (Dow Theory sell signal).

Dow Jones US Railroads (^DJUSRR)

Click to enlarge

And finally, look at the Russell 2000 (mini Russell 2000 continuous contract). The Russell is filled with small companies doing the majority of their business in the US. This tells me it's time to buckle up as the downside correction in US stocks is finally upon us.

Click to enlarge

Let the games (pain) begin.

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
< Previous
  • 1
Next >
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Featured Videos