Prepare your shopping list for next upturn!!!

Since my last post S&P has pulled back 5% and now is the time to get some cash into action. Investors should think of buying some good names in commodities and finance while traders should be looking to play the downside by protecting their gains by shorting the market.

In my last post I talked about a significant pull back in S&P to levels 820-840 and now we are seeing the signs with S&P already pulled 5% . In particular, commodities and agriculture have seen a very sharp decline (15-20%). I see potential of 5-10% downside before bulls are back in action.

Stocks have been trading sideways but yesterday was special. Market was down on huge volume and this could be the start of another 5-10% correction. Next couple of days are critical for the market direction and I would keep a close watch on Feds meeting tomorrow where they are expected to keep the key rates on hold.

Here are my plays.

For investors:

1: Look for investments opportunities in finance,alternative energy, technology, commodities and agriculture sectors. I would commit 1/3 on my cash into these names: MS, JPM, WFC, SPWRA, AAPL, MRVL, FCX, MOS, IPI. Another play is UYM, which is a ultra long for metals.

2: I will wait for another 5% pull back from this point to commit 1/3 of my cash. I would be all in if S&P drops below 840.

For traders:

1: I would look at the volumes after feds decision at 2:15 pm before shorting the market. If the VIX continue to go higher then I would play options instead of equities. Some of the options plays are: SPY puts, QQQQ puts. I am not recommending to short individual stocks as I think it is too risky.