Summer Investment Strategy, Play Defense

Summer Investment Strategy, Play Defense

Summer Investment Strategy, Play Defense


As we enter this Summer trading season the big Wall Street traders head to The Hampton’s to vacation their trading positions laid out and staked.

This year we are dealing with sluggish trading season, and an all but stalled global economy too. Notably, Eurozone business growth has hit a 16 month low. Export-dependent Japan reported another decliner this week marking 7 weakness for 7 months running.

Looking ahead to the Fall

Expect stocks will likely trade sideways ranged between a high at 18,000ish and a low of 17,100 ish. At their worst the correction will go deeper to say 16,500 according to my wor.

Let’s not forget that Friday afternoon that the US Fed’s Janet Yellen reminded participants that the FOMC could raise interest rates in June/July.

A we go into the Memorial Day holiday weekend there is apprehension in the markets. And it does not help that other world central banks are pushing rates negative, thus making the small rate hikes in the US much higher.

The Big Q: What’s an investor to do?

The Big A: Play the defensive names, as hey tend to hold up better than other stocks in good times and bad.

Investors boost returns on holdings by selling covered call options. Doing so in a sideways market allows for better income, also keeps the chances of getting called away lower.


That is one way to get over a Summer hump. But, should we see another wave of market fear like happened last Summer’s slump, it pays to find opportunities make money no matter what the market does.

Remember, cash is an asset, and there will always be a trade.

Friday, US major stock market indexes finished at: DJIA +44.93 at 17871.85, NAS Comp +31.74 at 4933.51, S&P 500 +8.96 at 2099.03

 Volume: Trade was below average with about 816-M/shares exchanged on the NYSE
HeffX-LTN Analysis for DIA:  Overall Short Intermediate Long
Bullish (0.26) Neutral (0.19) Neutral (0.10) Very Bullish (0.50)
HeffX-LTN Analysis for SPY:  Overall Short Intermediate Long
Neutral (0.19) Bullish (0.29) Neutral (0.17) Neutral (0.12)
HeffX-LTN Analysis for QQQ:  Overall Short Intermediate Long
Neutral (0.21) Bullish (0.42) Neutral (0.21) Neutral (0.01)
HeffX-LTN Analysis VXX:  Overall Short Intermediate Long
Bearish (-0.34) Bearish (-0.42) Bearish (-0.45) Neutral (-0.17

Have a terrific Memorial Day weekend.

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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