A Defensive Strategy That Works
A big theme in my writing -- at TheStreet.com and on my blog -- has been taking defensive action amid unhealthy demand for equities. There are several ways to measure this. I prefer taking defensive action when the S&P 500 goes below its 200-day moving average, then getting fully invested when it goes back above that point.
As Ken Fisher has said many times, the market can only do four things: go up a lot, go up a little, go down a little or go down a lot. My use of the 200-day moving average is to try to miss as much as possible of that last one. The attached chart shows a way that might help mitigate the full brunt of a bear market. It compares the S&P 500 (with its 200-day moving average in blue) and the CBOE BuyWrite Index(BXM Quote).| Taking Defensive Action |
![]() |
| Click here for larger image. |
| Source: BigCharts.com |
- Loading Comments...
- Loading Comments...
Recent Comments
Featured Photo Galleries
-
Ore Increases Boost Steel Prices
The Wall Street Journal.
-
Europe Weighs Rescue Plan for Greece
WSJ.com: Asia Home
-
China Passes Germany as Worlds Top Exporter
New York Times
-
Paulson Tells Buffett Banks to Repay ‘Every Penny’ (Update2)
BusinessWeek Online
-
Storm over bailout of Greece, EU's most ailing economy
Latest Business News from Times Online
-
IAC Posts Loss, but Still Beats Expectations
New York Times
-
Tuesday Reads
The Big Picture
-
U.S. Stocks Rally on Growing Prospects for Bailout of Greece
BusinessWeek Online
-
Toyota in new doubts over car fix
BBC
-
Rail Traffic Flat in January Compared to 2009
Calculated Risk
| Dow Jones | S&P 500 | NASDAQ | 10-Year Note | |
|---|---|---|---|---|
| 10,058.64 | 1,070.52 | 2,150.87 | 36.33 |
Oil *
72.02
|
|
UP
150.25
|
UP
13.78
|
UP
24.82
|
UP
0.41
|
10 Yr
3.63%
SPDR Gold
105.45
|
|
+1.52%
|
+1.30%
|
+1.17%
|
+1.14%
|
Data delayed 20 minutes |
More From TheStreet
Latest HeadlinesBrokerage Partners
Sponsored Links















