Stocks got crushed this week with the S&P 500 dropping 90 points between the intraday high and low. As a result of this, we’re now at major support at 1,200:
The market is oversold and traders are looking for an opportunity to ramp this thing higher. So we could see a move to 1,250. Remember, no investment goes straight up or straight down and most collapses follow a pattern of:
1) the initial drop
2) the bounce
3) The REAL drop
Indeed, the only thing that could really kick off a rally for stocks would be the announcement of QE 3 (or hint of it) from the US Federal Reserve. However, even this would be short-lived. The market has finally begun to realize that the Fed can’t solve the issues that created the 2008 Crisis. Which is why we’ve been in a free-fall for over a week now.
With that in mind, now is the time to be getting more and more defensive. This means moving to cash, Gold, and other safe havens. If you need to remain long in stocks you need to be shifting to high-quality, large-cap companies with strong balance sheets (little debt and lots of cash). They’ll fare better than small-caps or move speculative plays during a collapse.
Elsewhere in the markets, the US Dollar has rallied hard as investors flee stocks and the Euro. We’re now at resistance at 75. However, we need to break above 76 with conviction if this thing is going to last. If we do that, then the falling wedge pattern I noted a few weeks ago predicts a move to as high as 84.
I can show you how.
Indeed, this last week has been a great one for subscribers of my Private Wealth Advisory newsletter. We’ve already seen three winners from this drop. And we’ve just opened another four Crisis Trades that are already skyrocketing.
If you’d like to join us… and take steps to prepare your portfolio for the market blood-bath that is unfolding.