US Stocks are a sinking ship… Where to now?

Good Morning,

Happy Friday….

Well, once again, it hasn’t been a great week on markets…

US stocks “sank” (Dow Jones -177 points) amid uncertainty that recent policy intervention from global central banks is doing nothing to drive growth…


This is a worry, right?

“There’s a bit of a risk-off trade going on,” Don Ellenberger, senior portfolio manager at Federated Investors, said by phone.

“There’s so much negative sentiment in the market right now, you can see it when you look at the money that’s poured out of equity funds. It’s hard to define a clear trend right now without a whole lot going on but if you look around the market, earnings is something everyone’s focused on.”

PEAK did call the top of US stocks earlier in the week, as the MACD (Moving Average Convergence Divergence) crossed over….

This is not good news, as we see further downside risk in US equities short-term…

So what can you do to protect your portfolio?

1. Lock profits on stocks that you are well ahead (or, tighten stop losses)… increase your cash weighting in the portfolio

2. Short the index via ETFs, options or indices

3. Neutralise the portfolio buy buying BEAR (exchange traded fund, that goes up, when stocks fall)

Hold on tight, as we approach may….

The SPI is down 37 points this morning.



Niv Dagan is an Executive Director of Melbourne based boutique funds management and corporate advisory firm, Peak Asset Management ( He is also a regular financial commentator on Sky Business.

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