Why We Cut Stocks, Added Bonds Thursday And Friday [SPDR S&P 500 ETF Trust] - Seeking Alpha
Here is another great article by Chris Ciovacco about how to handle changing stock market conditions. A lot of people were probably shocked and bewildered by the -318 point drop for the Dow on Friday. However, we had a couple of -100+ days before the big drop, and investors should have already changed portfolio allocations. Chris presented an excellent chart of the S&P 500 compared to bonds ($SPX:AGG), and if you look closely at the chart, you will see early warning indicators for moving partly into bonds.
For example, the chart shows a downtrend beginning on December 23 and continuing for a month into January 2014. Also, the 3 day and 5 day EMA lines have both recently been broken. It is time to move to safe stocks or short-related stocks until the chart direction reverses. You could also buy VXX or TVIX since volatility has returned to the stock market. Just be sure to sell your bear stocks when the market turns bullish again.
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