ETF Periscope: 10,000 Reasons to Hedge Your Bets
by Sabrient - August 30th, 2010 2:01 pm
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10,000 Reasons to Hedge Your Bets
by Daniel Sckolnik of ETF Periscope
“Do not go where the path may lead, go instead where there is no path and leave a trail.” ~ Ralph Waldo Emerson
Though it’s not quite officially over, for all practical purposes it’s time to say goodbye to the dog days of summer.
The markets spent the last few months surfing its own volatility wave, yet ending up pretty much where it started. The numbers speak for themselves. The Dow Jones Industrial Average (DJIA) started June 1 at 10,133. It ended Friday at 10,150. At the same time, the benchmark S&P 500 Index opened the start of June at 1087, closed Friday at 1064. Oil? Using the ETF USO as a proxy, its June 1 opening was 33.65. Now? 33.57. What about gold? Using the ETF GLD for a proxy, we see it opened June 1 at 120. It closed Friday at 121, indicating a total $10 swing in the precious metal over the same time period.
So, the markets have effectively been in Sideways City all summer long. But now, with the return of all the big-money players from vacation frolics and the accompanying increase in trading volume, it’s time to get serious.
September is close enough on the horizon to taste, and both the Bulls and the Bears are positioning themselves in preparation for their respective expectations. It’s time for what might just turn out to be the main event of the year: The Battle for Dow 10,000.
DJIA 10,000, a psychologically important level, has proven itself to be fairly effective in terms of support throughout 2010. It first was tested this year all the way back in February, then was temporarily violated during the May 6th “flashcrash” before recovering. It was breached more deeply during the summer months, but once again finds itself serving, at least for the moment, as support rather than resistance.
So who has the stronger field position, in regard to market direction in general? The Bulls or the Bears?
If you go by the past week, it would be something of a wash, pretty much reflective of the summer. The early…