Well the market broke below support today around lunchtime on the back of more bad news coming out of the US sub prime mortgage sector.This prompted a big move down in the Yen crosses as people scrambled to reduce risk.As I have been saying for a while(-http://retirementtrader.blogspot.com/2007/01/stock-market-dropped-sharply-today-as.html)
I have been nervous about this market and have been taking profits where I can and buying PUTS or ETF's that protect my portfolio from downside movements. Tomorrow will be important to see whether we have any follow through on today's sell off.If we do then it could be a case of "Look out below".
I urge you to consider some protection for your portfolio either by hedging or by taking money off the table until we get a better handle on the direction of the market over the next month or so.
I am still bullish on energy in the medium to long term and came across a very interesting ETF recently released by Wisdom Tree-www.wisdomtree.com
It is the Wisdom Tree International Energy Sector ETF (DKA-NYSE) this ETF holds a broad spectrum of the worlds leading Oil companies such as Total, BP Amoco,Royal Dutch Shell, and Statoil, it looks like a great way to play the energy sector with a good amount of diversification. I am looking to add this to my portfolio, but am going to wait a few days until we see which way the market goes.
I would be a buyer up to $30 and would use a stop loss of 15-20% and expect to keep it for a few years.
Lets see what tomorrow brings, I still feel we are starting a downward leg -whether it continues tomorrow or not I don't know , if we get a bounce it may be a good opportunity to consider taking some profits and sitting on the sidelines a bit until things become clearer.
Best Wishes and Good trading