The ProShares Short QQQ (PSQ) was recommended for your Speculator portfolio back on May 4.
It was and is both a speculative bet and a hedge. Clearly, the bet was early — PSQ has fallen as the Nasdaq goes higher with other major U.S. averages.
The “wall of worry” dynamic has been in play all year — equities have climbed significantly despite (or even because of) worrisome developments around the globe.
This fear seems mostly to have subsided now. And that worries me …
According to the latest Investors Intelligence survey reading, not since 1987 has there been a higher ratio of stock market bulls to bears.
Furthermore, total market capitalization relative to GDP is at levels only seen before the dot-com bubble burst.
If that isn’t a sign that investors are too comfortable taking risks, need I mention that low interest rates have led to historically low global credit spreads?
What about historically low credit default swap (CDS) premiums on emerging market sovereign bonds?
The Wall of Worry has come crashing down. So, what’s left to hold up the stock market?
If you haven’t seen this chart before, it’s been warning me about when this bull market might finally give up some ground. It suggests a major correction is possible any time before the end of the year.
The pattern resembles a classic bull market that’s run its course.
And it argues for holding onto shares of PSQ and makes the case for adding additional short exposure to stock markets. But stay tuned for instructions.
It also argues for placing stop-loss orders on our existing positions in Green Plains Inc. (GPRE) and ETFS Physical Platinum Shares (PPLT). The economic backdrop is supportive for those two plays, but it’s doubtful they’ll be spared if global markets undergo a correction.
The ProShares UltraShort Euro ETF (EUO) has moved nicely in our favor. Considering what the absence of fear may mean for global markets, it makes sense to leave EUO right where it is for larger potential gains.
Trade Instructions:
Place a stop-loss order to SELL ALL your shares of Green Plains Inc (GPRE) at $15.83, STOP. This order is good-till-canceled.
Then …
Place a stop-loss order to SELL ALL your shares of ETFS Physical Platinum Shares (PPLT) at $87.27, STOP. This order is good-till-canceled.
