Chart courtesy of www.StockCharts.com
At this point, I’m not convinced upside moves in stocks are sustainable, especially without any sustained leadership from the financials or technology stocks.
As such, I suggest you add some put options to your large positions or the key stock market indices that reflect the focus of your holdings. For instance, a technology-focused portfolio can be hedged using put options on an exchange-traded fund (ETF) like PowerShares QQQ (NASDAQ/QQQ) or on small-caps with the iShares Russell 2000 (NYSEArca/IWM) ETF. You could also hedge against a downward slide in technology via an ETF like the Direxion Daily Technology Bear 3X Shares (NYSEArca/TECS).
This article is brought to you courtesy of George Leong from Profit Confidential.