Today on Berman’s Call: Using Volatility ETFs to Hedge Portfolio Risk

Author Larry Berman

Posted: 17 June 2012 re-posted from etfcm

The market is giving very mixed signals, but the internals suggest that at least a short-term trading low is likely developing. For the longer-term money looking to the buy dividend trade, this is most likely NOT the bottom of the current down cycle, so have some patience. Sentiment is not terribly bearish and the higher dividend paying stocks like REITs, Utilities, and preferreds have not been thrown out with the bath water.

In almost every major trading low we tend to see a wholesale liquidation, which we have not seen yet. We suspect there will be a big enough band-aid put loosely on Europe should Greece vote to remain in the EMU. We expect the FOMC to extend the twist next week, which should help build some support around current levels, but bounces are likely quite limited to established resistance zones 11,800-12,000 for the S&P TSX. It could be a bit higher if the ECB shoots a bazooka to support Spanish bond yields.


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