I started purchasing HQD.TO (Horizon Bear Nasdaq ETF) again. Some at 2450, and then some at 2500 points on the Nasdaq. I will look at loading up some more when the Nasdaq hits 2578 or higher, if it ever gets there.
If you think about the highs for the Nasdaq this year which was slightly above 2800, it is unlikely in this current economic environment that it will hit that high again.
About 6 months ago I warned a family member to move all his investment to cash or Canadian bond position, however the response I got back, was “Why should I do that, the financial stocks are doing very well now.”
I however, did not press the issue with this family member because I didn’t want to seem like a know it all, but I knew that the rise in the stock market will be followed by a sharp and violent downturn and it finally arrived.
I’ve been anticipating the U.S stock market decline for a while now and this week the Dow Jones industrial average declined below 12,000.
I believe there is more downside coming in the near future. My initial assumption was that this decline will start near the end of June, however with markets it is always difficult to know when it will actually happen.
As the stock market loses strength here and has problems moving higher I have increased my positions in both the Horizon Nasdaq bear ETF (HQD.TO) and the Horizon S&P bear ETF (HSD.TO). The Nasdaq index has had problems breaking above 2800 and the S&P has no ooomph to get past 1340 and it is stays like this for another month then I think we are going down.
I recently sold off my position in Claymore’s Gold ETF that is traded on the Toronto Stock Exchange (CGL.TO). I bought at $12.45 in early January and just sold at $13.58 which is roughly a return of 9% minus commissions. That is just under 9% return for 5 months, that is not bad considering money market and guaranteed investment certificates (GIC’s) are interest are very low.
In the short-term this might be true for the stock market, both S&P and Nasdaq broke out. I think it is possible to see S&P up to 1500 and Nasdaq up to 3000 however only in the short term (3 months) though. After that I don’t see much evidence of economic growth to push the stock market higher…unless U.S Fed , Bernanke prints more digital money out of thin air.
Below are the signs that the United States Economy is meeting some headwinds.
About 2 weeks ago I posted about entering a possible in HXD-TO the Horizons BetaPro S&P/TSX 60 Bear Plus ETF. Well, about a week ago I opened a position in HXD-TO. The Toronto Stock Exchange peaked at around 14,500 where the arrow is on the chart above, however this then it has had trouble reaching that level.
Well before the Japan earthquake and tsunami the stock markets were already looking a little weak as if they have almost reached their top. However, like the event on September 11th back in year 2001 which saw the U.S markets taking a dive on the destruction of 2 buildings and over 5000 people killed, the Japan earthquake and tsunami will be the catalyst of the next leg down of the stock market as the damage is far greater and the economic impact is larger.
The Toronto Stock Exchange look like it is set to hit the previous high of around 15,000 points at which time my prediction is that it will take a turn downward. This could be a correction of sorts that I could profit from. The 15,000 level also looks to be a top of a cycle and from there it could very well be down hill for a while.
Earlier in January, I spotted a Canadian rare earth mining company called Great Western Minerals group that trades on the Toronto Venture Exchange, stock symbol GWG.V that broke out from a sideways price consolidation. As you can see from the chart it was hovering at around $0.40 for quite a long time (3-4 months) and then it broke to the upside.
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