We hear a lot about the coming “fiscal cliff.” If Congress does not act before taxes increase and spending cuts go into effect at the beginning of 2013, the country could go into another recession. Rather than panic, now is the time to pay close attention to each major holding in your portfolio(s). Instead of limiting the ITA Risk Reduction model to five portfolios, I plan to expand the number, particularly if there is a large holding in the portfolio.
My suggestion is to walk through the price/195-Day EMA relationship when the market dips and check to see if profits need to be protected. Right now, most of the ETFs were are using are still priced above their respective 195-Day EMAs. That is the good news. We don’t know what might happen over the next six to seven weeks. Just be prepared.
This article motivated me to issue a warning to ITA Platinum members.