I thought this week I'd get a little tactical and put up three areas where my signal flashed an intermediate sell signal. For me I will choose the route of buying puts on the ultra long option in these sectors. Note, it is possible that we can get strength in these for a week or two yet, but my signal is very reliable 60 days out.
I leaned a little long going into the weekend as I think the Republicans main event is the debt ceiling, we get a compromise or punt, get a relief rally, and then the main event. This CR issue is a sideshow to show seriousness. What is amazing to me is how the Republicans constantly maneuver themselves into a corner, take a strong hand and turn it into a loser. A lot of people are going to lose a lot of money very quickly and it will be tied to Boehner.
My signals are showing that the dollar is about to turn sharply higher, therefore, energy, high beta, and emerging markets are most at risk, and that is where I am focussing my trades. I am also still short FAS, GLD, and NUGT with puts, and with a DUST position. I am long with XIV, and still have a UCO trade on that I will close this week. I am giving XIV another $.50 to see if any compromise causes vol selling. Any further weakness in XIV on the weekly puts us in a 4-6 week high volatility period. That makes sense based on the other chart patterns I see.