The small-cap Russell 2000 is up 8.5% in a week–time to go short

The small-cap Russell 2000 is up 8.5% in a week–time to go short

On Monday, I will add to my short position in the small-cap Russell 2000 by buying more of the ProShares Short Russell 2000 ETF (RWM) for my Jubak Picks Portfolio. This buy will give me two positions in the ProShares Short Russell ETF. The first position, added to the portfolio on July 23, 2023 is up 0.08% as of the close on November 3. Why go all in on shorting the Russell now?

Special Report: Your 10 Best Moves for the Rest of 2023, Part 2–10 of 10 Moves (revised on 10/22)

Special Report: Your 10 Best Moves for the Rest of 2023, Part 2–10 of 10 Moves (revised on 10/22)

So what do you do with your portfolio for the rest of 2023? And what’s your best strategy to be prepared for 2024? In Part 1 of this Special Report I laid out the 10 developments that I thought would drive the financial markets for the rest of 223 and into 2024. Today, in Part 2, I’m going to give you the first 2 of 10 moves to take–with as much detail and as many specifics as possible–that you should be making now to position your portfolio for the uncertainties of the last quarter of 2023.

Buy (more) of the ProShares Short Russell 2000 ETF to short small caps in this credit crisis

Special Report: My 5 Favorite Shorts for This Market–Shorts #1, #2 , #3 and #4 (so 1 more to come.)

I’m expecting modestly positive economic news in the next few days. Which will, in my opinion, create a low-risk opportunity to make big gains by going short this market in order to profit as stock prices fall. I’m looking to put the first of those shorts in place right now. With the rest to go into place in the days after the Federal Reserve meets on Wednesday, May 3. In this Special Report, I’ll explain this perhaps initially counter-intuitive call on short-term market direction and give you the details on five of my favorite shorts for profiting in this market. With the first short pick today

Buy (more) of the ProShares Short Russell 2000 ETF to short small caps in this credit crisis

Special Report: 10 Picks for the Coming Recession

10 Picks for the Coming Recession. This one is especially difficult. Not only do I face the usual crystal-ball problem that comes up whenever you try to pick an investment for the future–what’s the macro and micro world going to look like in 6 months or a year from now–but I’ve got two big Recession-specific challenges. First, is there actually going to be a Recession in 2023? All the signs, in my opinion, point toward a recession in the second and third quarters, but it’s by no means guaranteed that we’ll have the two quarters of negative GDP growth that’s required by the minimal definition of a recession. And what’s the point, you might well ask, of making picks for a coming recession that never arrives? And, second, how bad will this recession be?

Special Report: 9 Picks to Make Money in This Bear Market

Special Report: 9 Picks to Make Money in This Bear Market

I expect the current Bear Market to go on for a while. To be clear, I’m looking for a bottom in late 2023 or 2024. Either of those dates is still a long way of. And I’m expecting that the bottom, whenever it arrives, will be significantly lower than the 3600 level on the Stanard & Poor’s 500 that has prevailed recently. I hear speculation about 3,000 on the S&P 500. That’s another 20% below the 3600 level. But I don’t expect that we’ll hit that bottom in a straight line. We’ll have significant Bear Market rallies that suck money off the sidelines just in time to catch another leg lower in the market, for example.
Bear Markets seem determined to inflict maximum pain. So it’s extremely important to play good defense. Sell your riskier positions. Take profits, when you have them, when you see signs that a portfolio favorite, even a long-term favorite, is seeing important negative trends in its business. Make sure that the stocks that you’ve decided to hold through the carnage are stocks you really, really believe in: it can be punishing to hold on and hold on, only to lose faith and sell near a low. Build up cash on the sidelines. Find low-risk cash-like positions to use as safe havens as the Bear continues to prowl. But as important as playing defense is in a Bear Market, there’s no reason to abandon altogether the search for profits. Even in a Bear Market, there will be narrow–and probably fleeting–opportunities to make a profit. And that’s what this Special Report is about–finding ways to make money–9 of them in this take–even in THIS Bear Market.

The small-cap Russell 2000 is up 8.5% in a week–time to go short

Adding short Russell 2000 ETF on belief that this bounce is over ahead of July 27 Fed meeting

Today I’m adding shares of the ProShares Short Russell 2000 ETF (RWM) to my Volatility Portfolio on the belief that the bounce of the last week is over ahead of the Federal Reserve’s July 27 meeting. I expect that the central bank will raise interest rates by 75 basis points at that meeting (although a 100-basis-point increase remains an outside possibility.) A 75-basis-point increase, far larger than the Fed’s standard 2-basis-point hike or even the “we’re serious” 50-basis-point increase, will be an admission that the central bank doesn’t think inflation is under control. And I further think the Fed will say something to the effect of “Inflation remains stubbornly high.
Those two pieces will be enough to revive fears that the Federal Reserve will raise interest rates further in 2022 and is likely to produce a recession sooner rather than later. I’m using the Russell 2000 small cap index as my volatility vehicle here because this index tends to be the most sensitive of the major indexes to shifts in investor sentiment. And I’d therefore expect the biggest reaction to a revival of recession fears from the Russell 20000.

It’s a war of two narratives–today “recession” narrative replaces “rate cut” narrative and stocks fall heavily

It’s a war of two narratives–today “recession” narrative replaces “rate cut” narrative and stocks fall heavily

Yesterday, the stock market was up with the Standard & Poor’s 500 gaining 1.46% on the day and the NASDAQ Composite up 2.49%. Listening to the Federal Reserve’s policy statement after the June 15 meeting of its Open Market Committee, Wall Street chose to hear a promise of interest rate cuts as early as the end of 2023 and certainly in 2023. Aggressive interest rate increases in 2022, from this perspective, are just a necessary precondition to those interest rate cuts. Today, the stock market is down with the Standard & Poor’s 500 falling 3.25% and the NASDAQ Composite off 4.08% at the close. The narrative on investors’ and traders’ minds today is the rising odds of a recession–75% odds in favor by 2024 a Bloomberg survey of economists says with 25% odds of a recession in 2023. For a day that trumps the hopes for 2024 interest rate cuts (which would, after all, only materialize if the economy has, indeed, tumbled into recession. I expect this “War of the Two Narratives” to continue for a while

Special Report: 5 Picks and 5 Hedges for a Falling Market (4 picks and 2 hedges as of June 4)

Special Report: 5 Picks and 5 Hedges for a Falling Market (4 picks and 2 hedges as of June 4)

2021 will be a very different year from 2020. Or to be more exact the second half of 2021 and 2022 will be very different. We’re looking at going from a financial market where investors and traders believed the Federal Reserve was on their side with cash and more cash to push the prices of financial assets higher and then higher some more to a market where everyone is asking when will the Fed take th punch bowl away and shut down the party.Let me be clear. At this point it’s not the certainty that the Fed will reduce its $120 billion in monthly bond buying in this exact month or that, or the certainty that the Fed will start raising interest rates before the end of 2022, say, but rather the worry that those events are on the calendar, that they will change the trend in the market, and that no one can predict when the turn will materialize.FDR said “We have nothing to fear but fear itself.” To which the market right now says “Exactly.” Look at this “fear and worry calendar” that I’ve put together. And today I’ve got 3 picks and one hedge for this market

Buy (more) of the ProShares Short Russell 2000 ETF to short small caps in this credit crisis

Can’t swim against the cash flood anymore–selling my ProShares Short Russell 2000 ETF out of the Volatility Portfolio tomorrow

I bought the ProShares Short Russell 2000 ETF (RWM) back on October 30 because I felt then that the market wasn’t pricing in any of the potential problems likely to hurt the U.S. economy over the next couple of months. I picked the small cap Russell 2000 index for my downside bet because it was showing the most sensitivity to news–good and bad about the economy. Well, I got the sensitivity part right. But I missed the effect of huge cash inflows on stocks in general and the Russell in particular. Right now potential bad news and even actual bad news doesn’t matter much. Stocks keep going up. At the close on December 9, Wednesday, I had a 19.89% loss in this position after today’s slight 0.69% drop in the Russell 2000 (and 0.72% gain in this short ETF.) I’m not willing to let this loss get any bigger so I’m selling this position.