Republic Risk: We're Red

The buying didn't return, and the selling pressure accelerated. The trend remains negative, but there could be a stunning leg down now.

Dear Fellow Expat:

We’re red on the Russell 2000, and I’m not sure how long this will last and whether we’ll get some buying on the 12 or 2 pm hours today. But I will simply note that we have reached that period now, as buying pressure is really light.

The Russell is now likely heading to its 50-day support level, while the S&P 500 flirts again with its 20-day moving average - and bounced right off the 4,750 level before 10 am.

We’ve been advising hedging since the end of December when markets were overbought. Be sure to read the Six Rules for Negative Momentum.

Pay close attention to our additional signals as we continue to watch the state of affairs in this market. I’ve been asked for insight into various funds on which investors can hedge… and additional insight into what comes next.

I don’t like to short - but inverse ETFs like the RWM and SH present opportunities for the Russell 2000 and the S&P 500. Leveraged ETFs like the TZA and SPXU are more aggressive and error-prone for most t…