There has been quite a bit of volatility in the market recently. Looking at the charts of STI, S&P500, DJIA and Nikkei 225. They all exhibit some worrying signs.
The down trend in Nikkei 225 is intact and continues to head south. STI might be in the process of forming the bearish double-top chart pattern. S&P500 and DJIA might go into a side way market. Nothing is particularly clear.
VIX at this moment stands at around 25, which means investors are cautious. They are neither too pessimistic nor too optimistic. Greed and fear are not at their extremes.
Under such circumstances, I have decided to be more conservative and prudent. Reducing my exposure to stocks, and keep only the best of the best blue chips, blue chips with a more steady dividend payment history.
I will consider it a rash act if you go long with big positions in stocks without any hedging strategy. Devicing a proper hedging plan which involves the use of options seems a necessity, rather than a choice.
Happy investing!
Sunday, August 15, 2010
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