This is an Interim Wall Street Digest Hotline Update for Wednesday, November 12, 2008, at 6:00 p.m. EST.
Profit warnings by Best Buy helped push stock prices lower today. At the close, the Dow plunged 411 points, closing at 8,283, while the Nasdaq fell 81 points, closing at 1,499. The S&P 500 lost 45 points, closing at 852. Oil closed $3.17 lower at $55.75 per barrel, and gold closed $14.50 lower at $718.30 per ounce.
The market is testing the October lows. The completion of an inverse head-and-shoulders pattern could produce the final bottom followed by a strong 2- to 6-month bear market rally back to Dow 11,000 to 12,000.
(A) If you are out of the market stay out and wait for the bottom.
(B) If you are short the market stay short for now.
(C) However, if you are long the stock market, consider purchasing off-setting short positions so you are market neutral. Use Proshares 200 percent short ETFs to offset your long positions.
ProShares Ultra Short 200% Short
Dow 30 DXD
S&P 500 SDS
Russell 2000 TWM
Nasdaq 100 QID
S&P 400 Mid-Cap Index MZZ
Make no further portfolio investments.
Now is a good time to read "The Great Bust Ahead" by Daniel Arnold, and "Dollar Crisis" by Richard Duncan.
Stay close to our Hotline Updates.
The next Hotline Update will be on Friday, November 14, 2008, at 6:00 p.m. EST.