Still Planning to Sell into the Rally

Today's explosive rally of almost 500 points in the Dow makes my prediction for a down market this week look really wrong :-) Fortunately, I am still invested in equities, with no short positions. My only "loss" was the opportunity cost of selling all financial stocks in our trading account last Friday, and missing the 25% advance today.

I am still not convinced this is the end of the bear market. The last Geithner rally lasted a little over month, from the end of November, 2008 to the beginning of January, 2009. I expect this rally will also last about a month. At this point, I plan to enjoy the rally, and take the opportunity to take some profits as the stock market rises.

In addition, I may once again consider buying some inverse ETFs, as a hedge. Last time, I purchased the inverse ETFs too soon after a bounce, waiting only two to three weeks. This time I will wait until the end of April, 2009 before making any purchases, to allow this rally to fizzle. Ultrashort Financial Proshares (SKF) is the primary one I am considering, although Ultrashort Real Estate Proshares (SRS) may also worth consideration, if the indices and sectors continue to have a V-shape recovery.

For more on Strategies and Plans, check back every Monday for a new segment.

This is not financial advice. Please consult a professional advisor.

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