(By Rich Bieglmeier) So much for Monday's late run being something positive for stocks. Apparently, bears slept on getting their butts kicked for the last 30 minutes on Monday and didn't appreciate it. When the alarm went off Tuesday morning, sellers were in a foul mood and wanted to extract some revenge. They forwent the coffee and caffeine, rolled into the office snarling and unshaven, damn it, don't you know that profit forecasts are brutal for the fourth quarter; we'll show you, watch this – poof, down 250 at the open.
By the time whirlwind of pigpen style sell tickets settled on the floor, bears tore through key support levels for the Dow and S&P like a hungry Pocono Mountain black bear through a glad trash bag. It's no contest, as a 400 pounder proved one 80s school morning.
After trashing the indexes, it is clear from a chart-watchers view that the script has been flipped, for now. Sort of like Mitt Romney playing the part of Barack Obama, and Barack trading in his O for a W – oh so confusing. Anyway, until yesterday, investors could look like geniuses by following the simplest of rules, buy the dip.
Now, investors should be selling the rallies until the indexes start producing higher highs and higher lows. Hopefully, any further correction will be as painless as possible. Maybe, we get lucky, and bears will be satisfied with a few, old spaghetti-O cans and making a minor mess, leaving the scene when the Dow hits 13,000, the S&P 500 at 1,400, and 2,950 for the NASDAQ.
Perhaps, sellers will be satiated with an Apple profit announcement on Thursday. Wall Street better hope iPhone 5 saves the economy – right Morgan Stanley? After hibernating since 2009, that bear looks might skinny. We might be here for a while if the tech giant's numbers aren't fulfilling, which we suspect could be the case. There have been plenty of warnings; not living up to the hype on the first weekend, Verizon (VZ) announcing that sales have been underwhelming, and analysts revising numbers lower. As the great philosopher, Ranger Smith said, "Don't feed the bears!" Are you listening Tim Cook?
We realize that many investors only feel comfortable on one side of the market, buying; however, when the indexes try to pull in the suckers with a rally, you might consider buying an inverse ETF such as ProShares Short Dow30 (DOG). How appropriate. It goes up when the Dow Jones Industrial Average goes down. The get out signal will come when a rally is followed by a selloff that U-turns before piercing the preceding low, pivot point.