Small caps and financials began selling off earlier as investors took profits on some of their riskier positions and now the selling is expanding to other areas of risk. My favorite areas right now to look for weakness are Casinos and REITs. Casinos are now forecasting only a 1% growth rate in 2010 [whooppee] and REITs, at least those managing strip and shopping malls, are a ticking timebomb waiting to default. Looking at the REIT charts, you’ll notice many have already begun to form triangles and there are two that are not selling off. A healthcare REIT and the other industrial. This is to demonstrate obviously that not all REITs are created equal and it’s prudent to do your homework.
Short at upper resistance with a stop above to limit your risk or wait for a break of support and place your stop above support. If you’re unable to get shares during normal trading hours, try premarket but these will go like solar [which I’ve been Bearish on since October]; once support is broken selling will accelerate and shares will go quickly. No, this does not mean we’re revisiting the bottom; we’re merely going to retrace the entire rally in my opinion rather than just the last leg up but take your profits or hedge your longs. I’m not too thrilled on inverse ETFs at this juncture because its my belief that *fear* is really required to get any good momentum on them but as a day trade, yes, they’ll work too. Only day trade the inverse however, do not hold overnight unless you have a strong stomach. I hope these charts give you a few ideas. Best of luck-