Too Many Scary Headlines To Actually Be Bad?
I’m tacking this blog entry into the ‘Market Call’ section, as it has mostly to do with my bearish prediction I’ve been discussing for a few days now. As the title asks, are there too many scary headlines today to actually be bad?
This is - as a contrarian - normally where I’d say the onslaught of grim news would actually be a sign of a short-term bottom. People tend to freak out at the least opportune time.
In this case, however, I think this is the kind of thing we’re going to see for a while….long enough to keep inspiring some selling. Considering the recent rally we’ve seen, there are actually profits to be taken (unlike most short-term bottoms).
Bottom line - I’m taking the news at face value, and assuming the market will view this as a reason to sell.
Of all the indices I think currently offer a good reward compared to the risk involved, I feel the Russell 2000 is the best….only because it’s rallied the most lately. That makes it the most vulnerable.
You could short the Russell 2000 ETF (IWM), or buy put options. Either way, I think a move back down to $65 is likely.
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