ManyPeaks.com

This market was negative this week for the first time in what seems like forever. Stocks kept showing a tendency to sell off during the afternoon hours, and Thursday saw the most relentless selling pressure since the March lows. I believe there is more to come.

Currently, our ManyPeaks clients are out of most individual stock positions, and are holding a fairly good sized chunk of short exposure to the S&P 500.

I’m not calling any long-term top for the market, but the odds of a correction here are pretty good. That’s primarily because each of the last two pushes to new highs have been less vigorous that the previous one — the RSI indicator on the chart shows this quantitatively. The S&P has also broken a 2 month uptrend line, which isn’t exactly encouraging for upside progress.

We are playing the downside by owning the PowerShares UltraShort S&P 500 ETF (symbol SDS), which has a correlation to the underlying index of -2.0.

I’m writing from Interstate 40 on our way to Charlotte for the Coca-Cola 600 — in the passenger seat of course. Internet connectivity via the cellphone network is priceless!
Have a wonderful long Memorial Day weekend.

Long SDS