I have updated the stock and ETF watch-lists on the website.
As might be expected, we are seeing general weakness in almost every sector except for energy (as oil continues its march towards $100/bbl). As a result of this broad market weakness, quite a few of the stocks and ETFs that we track have moved into the "sell" category and many others that I have maintained a "hold" label on (for now) are showing signs of topping. This is not surprising given how technically overbought markets had become and also given the supply chain issues being experienced in the global economy.
The weakest sector for the time being is tech stocks (Nasdaq) but we are now seeing this weakness creep into other indexes such as the S&P 500, DJIA and the Russel 2000, The commodity heavy TSX remains relatively strong but if the sell-off continues I expect that it will also break down.
In general, now is a time for caution in the markets as Central Banks are seemingly trapped between a rock and a hard place. On one hand they need to raise interest rates to tame the emerging inflation problem and on the other hand they need to keep rates low in order for governments, businesses and individual consumers to be able to finance the enormous debt that plagues the system.
For now the portfolios remain positioned defensively and will remain so until I see signs of stability. In addition to holding defensive sectors and inverse positions, I have not ruled out a move into cash if the weakness continues.
In bear markets or times of volatility, it is critical that investors take measures to manage risk and protect their hard-earned gains. Despite claims to the contrary, remaining invested during a bear market can wipe out many years of profits and drastically reduce your investment potential. If you are interested in learning how to construct your own low-cost stock or ETF portfolio, avoid losses and even prosper during bear markets, consider subscribing for less than a dollar per day!