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Investing in a Bearish Market

During hard times like the ones we are seeing now with the economy, one thing i am beginning to like is Ultra Short ETF's. They are basically bets against certain sectors or indexes. There are also ProShares which bet for the market to go up.

One of my latest moves into ETF's is buying (SKF) Ultrashort Financials on August 14, 2008 . As you can see from the table i have provided (hopefully it displays decent in most readers) I am looking at the Point & Figure Patterns for the Top 40 stocks market cap wise in the financial sector. FRE and FNM are not up at the top but have been talked a lot about in recent news.

Before i get you confused as to what the signals mean I will provide a brief description of each, courtesy of stockcharts.com

• The double bottom breakdown implies that the buyers who were supporting the price are no longer able to create demand that is more than the supply, and prices are breaking down.
• A triple bottom breakdown is similar to a double bottom breakdown except that the price at which the breakdown occurred is a price that the chart retraced from two times before. The breakdown below this level implies that the sellers are now creating more supply than there is demand and therefore the prices are breaking down.
• A double bottom followed by another double bottom, or three bottoms, each lower than the previous is recognized as an descending triple bottom breakdown. The idea is that supply is continuing to outstrip demand on an ongoing basis.
• A bull trap is a triple top breakout followed by a reversal. The breakout is possibly due to buy stops being hit just above the resistance level, and the quick reversal suggests lower prices ahead.
• The high pole warning is given when a chart rises above a previous high by at least 3 boxes but then reverses to give back at least 50 percent of the rise. The reversal implies that the demand that was making the prices rise has given way to supply pressure. The pattern is a warning that lower prices could be seen in the future.
• Bullish signal reversed pattern is a series of rising tops and bottoms that finally soaks up all demand and the double bottom breakdown at the end signals that now supply is outstripping demand.

Enjoy the table I have created. As you can see many bearish signals were given on August 13 so I went ahead and bought SKF on Aug 14 at $123.50.

This is the longest post i've written and I'm sure some of you want to ask questions or make comments, please let's discuss.