Small and Large Caps

Both seem to be getting hit today. I'd like to look again in a bit to see if high yield stocks are seeing any inflows, but for now, take a look at BGZ and TZA, both inverse ETFs, on small cap and large cap stocks.

Both ETFs look like they've undergone a decent size accumulation cycle, mark up would come next and that's when they'd really move. If you want exposure to either group that is broad, these are good choices, but ETFs should never be the extent of your exposure, they're a good way to get broad exposure quickly. If you enter these trades, keep in mind the market is likely to move up and play some tricks along the way, so set your stops with some room, position size so that these or any trades don't put your portfolio at significant risk. You can check out the risk management link at the top right of the site, but my general rule, depending on how many open positions you carry, is that a failed trade shouldn't do more then 2% damage to your overall portfolio value. There are caveats to that, you can se in the risk management link, but to assume that the market will head straight down from here or that these will had straight up is setting yourself up for disappointment and failed trades. Even in the ugliest of bear markets, we typically see nearly as many up days as down days, the down days are just more extreme. So take a "big picture" view and set your risk management accordingly.

Otherwise, both of these seem like they are set for a cycle moving up. Be prepared for the pullbacks though.