Note that there is more than one Spider:
XLB The Basic Industries Select Sector SPDR Fund
XLV The Consumer Services Select Sector SPDR Fund
XLP The Consumer Staples Select Sector SPDR Fund
XLY The Cyclical/Transportation Select Sector SPDR Fund
XLE The Energy Select Sector SPDR Fund
XLF The Financial Select Sector SPDR Fund
XLK The Technology Select Sector SPDR Fund
XLU The Utilities Select Sector SPDR Fund
So, big cap tech (IBM, CPQ, AOL) is better hedged by XLK than QQQ,
but QQQ is obviously a better hedge for Nasdaq stocks. If it is
a high negative beta that you want, just put your money into USPIX -
it is a Profunds fund that is 200% short Nasdaq.
That is a bit too risky for my taste. This bull market will not
die easily. In the case of an incipient bear market, my plan is to
sell Jan 00 ITM calls against my longs (to defer taxes), and to go
short an equal number of shares in XLK and XLF. If the pattern of
earlier corrections and bear markets is repeated, the financials
will top out first. In fact, this may already have happened. See:
MER, C, JPM, MWD, SCH, NITE. Senior tech may have already topped,
too - see: LU, IBM, CPQ, HWP, AMAT. Market leadership is
deteriorating one stock at a time. INTC is still strong, however;
it is the market bellwether at the moment. If INTC puts in a top,
and the dollar and treasuries continue to weaken simultaneously
(dollar below 110Y and 30-yr above 6.3% yield), I will implement my
bear mkt strategy.
(I know, I know... can't time the market... but what if the most
atractive investment at the time is short sales and cash?)
AA |
