I haven’t updated my hedging strategy is a while, because, in a down trend with hedges on and the market showing continued weakness, if you are following your own form of hedging you shouldn’t need the update. Stocks still haven’t shown much strength the way I look at it. Below is a chart of where I find myself right now on February 10th.
After a sizable move down, the SPY indicator has rallied back to roughly where I put the hedges on (marked with the little read circle). NASDAQ has been down even more as the tech stocks have been getting punished.
However, just to open minds a bit, I’ve noticed that other markets are also moving. With the drought in Brazil, Soybeans have had a super run up.
With the FED talking about interest rates moving up to fight inflation, you’ve got Ultra Bonds (25 year+ maturities) steadily falling as shown below:
Lean hogs, cotton, cocoa, crude oil soybean oil, corn and coffee have also made some fairly steady trending moves. I encourage traders to think a little more outside the box and realize that stocks are not the only game in town. By using a little extreme diversification in your portfolio, you can find pockets of opportunity. Exploiting those opportunities can keep the overall portfolio on a steady path and greatly help your trading psyche. Enjoy the ride everyone!
Appreciate the update.
I am learning slowly Tom. Makes sense especially with the futures markets so accesible nowadays.