Chess Moves

Given the previous churning and subsequent selling pressure we are seeing today at both the 20 day moving average and the lower trend line of the rally since February in the $SPX, I have decided to initiate a 10% short position in my portfolio, via purchases of $TZA (triple short small caps) and $SMN (double short materials).

I chose the small cap triple short because of the high beta nature of the small caps, and how much of a run they have been on. Certainly, in a correction they will fall fast and furiously.  Also, I chose materials because of how weak the sector chart looks…

Please keep in mind that these are merely hedges for now, only comprising 1/10 of my portfolio.  However, if we continue to weaken, that could change.