Investors fled Wall Street in the worst stock-market selloff since the middle of the financial crisis in early 2009 in what has turned into a full-fledged correction.
The Dow and the S&P tumbled more than 4 percent on Thursday and the Nasdaq lost 5 percent on fear the United States is staring at another recession and that Europe's sovereign debt crisis is swallowing two of its largest economies.
Analysts predicted further losses even though stocks have fallen on nine of the last 10 days. Two-year Treasury yields fell to a record low as investors sought safety in short-term government bonds.
The Dow Jones industrial average was down 512.46 points, or 4.31 percent, at 11,383.98. The Standard & Poor's 500 Index fell 60.21 points, or 4.78 percent, at 1,200.13. The Nasdaq Composite Index lost 136.68 points, or 5.08 percent, at 2,556.39. (commentary & photo courtesy of Reuters)
Today’s carnage took down the RSI portfolio as four positions stopped out for –1.0R losses. They are:
- iShares MSCI Japan Index (EWJ)
- UBS E-TRACS 2x Long Alerian MLP Infr ETN (MLPL)
- iShares MSCI Spain Index (EWP)
- ProShares Ultra Semiconductors (USD)
This leaves six remaining holdings. What to do next? We have all the stops still in place and if there is further market carnage, I expect maybe three to five funds that will hit the skids. On the bright side, there is only a finite loss that can befall the portfolio when all the remaining stops get hit. We will know in the fullness of time.
After the market close, RSI issued sell signals on USO & OIL, but surprisingly it gave the following buy signals:
- Buy 207 shares SPDR S&P Oil & Gas Exploration & Prod (XOP); Volatility = 8.79%
Not too surprisingly since the module that made this pick looks for extreme price excursions (see the chart below). If you wait until the end of this decline, it might be a worthy investment. After all, we still need to find and produce oil & gas … right?
