Stocks near meltdown? 3 picks for a bear market

One indicator is pointing to a crash. Here are some funds that could help investors protect themselves.

By MSN Money Partner Jan 10, 2013 9:49AM
 Stock market report ULTRA F Digital Vision Getty ImagesBy Teeka Tiwari, editor www.ETFWarrior.com

What do this market and a fictional diner have in common?

Have you ever watched Monty Python's movie "The Meaning of Life"? For those who skipped on this nonsensical British humor film, one scene depicts an absurdly overweight man, Mr. Creosote, sitting in a restaurant gorging himself. Just when you think he can't eat another thing, he decides to finish off with a wafer-thin mint. As soon as he finishes eating it, he promptly explodes.

Why have I regaled you with this story?

It's because one of the most accurate indicators I follow is starting to flash a warning sign that the market may be about to do its best impression of Mr. Creosote.

The Investors Intelligence Advisors Sentiment index has skyrocketed to 51%. This means that 51% of all advisers are bullish. Let me ask you this: How many times have you seen the crowd get it right when it comes to the stock market?

Exactly! And that is why I'm worried. Readings from this level generally point to trouble ahead. So what's an investor to do? Well I'm glad you asked, because here are the three ETFS's to watch.

iShares Trust Barclays 20+ Year Treasury Bond (TLT)
TLT ETFDuring times of market crisis you want to be in bonds. Yes, I know the yields are horrible. TLT is a short-term safe haven trade in 20+ year US government bonds.

You can get long here at $119 with a $115 stop the target is $126.

PowerShares DB US Dollar Index Bullish (UUP)
UUP ETFWhen the spaghetti hits the fan the world flocks to the dollar.  Use UUP to weather the coming storm. Can get long here at $22; use a $21 stop with a $23 target.

CurrencyShares Australia Dollar Trust (FXA)
FXA ETFCommodities will get clobbered when the market drops. Australia is hugely levered to commodities, so consider shorting their currency via the ETF FXA.

I'd wait for a move to $106 to short it, with a $107 stop and a $100 target.
84Comments
Jan 11, 2013 11:28AM
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Note: a person would have to not eat, go naked & quit driving because you cannot buy anything anymore without paying stockholders, CEO's first, then the working men & women get what is left  to live own, ma & pa have been run out of business by the so-called job creators, who have run everybody else out of business, just look at any place in USA, Wal-Mart opens a new store, then most small business,s are forced out of business, then they hire all the poor smucks in the area for less than minimum wage and the city leaders call that progress, i call it un-American, myself i won't by anything from these big retailers unless i absolutely can't due without it, people should try craigslist, e-bay, garage sales, flea markets or any other alternatives for their needs & support your local small business owner who makes a living working instead of sending your money to some big corporation so they can buy a new jet. Just drive around any city and see if you can find any ma & pa owned business..........few and far between....just about every grocery, restaurant, gas station, appliance, drug, clothing store & repair shop is a chain store with employees who make very little income and have no ins while the CEO & stockholders makes millions and they think they are doing everybody a favor.....consumers have dug there own grave by supporting these type of individuals and corporations..........it was just reported that CEO of Starbuck's just sold $104,000.000 worth of his own stock before Jan 1, 2013 so he could get out of paying $6,000,000 in taxes, just ask your local barista at Starbucks  how much he makes per hour...peanuts.......what due you call an economy that benefits a select few at the expense of the masses ????????? 
Jan 10, 2013 10:24PM
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Teeka:

 

I picture you as a blond with big tatas.

 

Jan 10, 2013 10:15PM
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The market always descends from a bull market into a bear market.  That's not rocket science either!  If one screams long enough that the market is falling, it must, eventually.  There's absolutely no evidence that the market can continue to climb forever.  It never has!    Instead, there is more than sufficient evidence to indicate that the market is cyclic!  Of course it's going to fall!  Knowing when, however, seems to be really difficult to predict.  Are we at the top of this cycle?  I for one don't know or profess to being able to tell.  However, it's my opinion that the current crop of politicians are pretty high on the "idiot" scale and I wouldn't put it past them to do something that really harms the market as this country bumps up against the debt ceiling!  Hang on, it's going to be a wild ride!  I seldom smoke... but when I do... I prefer Acapulco Gold with my Dos Equis.  Stay high my friends and don't forget to share your joint with the ladies!
Jan 10, 2013 10:04PM
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What's wrong.  Let me tell you what's wrong with that.  The millionaire only gets taxed on what he spends with your system.  If he don't need to spend half of what he earns, he only pays taxes on that half.  I on the other hand have to spend all I earn cause I earn so little so I pay taxes on all I earn, not just half!  I'm not a rocket scientist but it seems to me that your idea doesn't give me a fair shake since I get taxed on 100 percent of my income while your rich guy only gets taxed on 50 percent of his income.  I tell you what, I won't spend any of my money above the table.  You can bet the rich will be doing a lot of that too.  The government will end up with even less tax dollars and prisons full of tax evaders that the fools paying federal sales taxes will end up supporting!  Give me a break!  What kind of education system do we have in this country?
Jan 10, 2013 8:07PM
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As a mature investor (age 65), my advice to those who are reading this, or any other article by internet "advisors". Do yourself a HUGE favor and stop reading any of them. None of them know YOUR goals or resources. Thus, their counsel is at best, a point of view that bears astute analysis by someone that knows you. Define your goals and then spend some time to develop some basic analytical skills. Use them to craft a plan, then talk to someone who won't try to sell you a pat program to get rich for retirement. YOU make the decisions and stay on course, be patient, and responsible choices will payoff with satisfying results.

Jan 10, 2013 7:52PM
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I might change my user name to Akimoto Unchained!

Har har har!
Jan 10, 2013 7:29PM
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Look if it's all going to come crashing down - Just where would you put your money? I would argue that stocks are the safest place for money to be.  Unless society quits functioning altogether ( the odds are a Trillion to one that it will happen) then the great companies I've invested in will continue to sell their goods and services and evetually the prices will adjust to the situation.

 

Invest in great Dividend Companies - Sit back and relax ! So simple even the idiot that wrote this article can do it !

Jan 10, 2013 7:22PM
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I've read a lot of useless articles on MSN over the years but I have to say - This one wins hands down as the Most Useless Article of All Times ! Congratulations !!
Jan 10, 2013 7:14PM
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Determine your risk and pay if you want to play.  It's fundamentals not fear.  The only time shift out of stocks is when the masses come roaring in at the last minute.
Jan 10, 2013 7:00PM
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Should we pay much attention to an author who uses the term "crash" and who is also the editor of ETFWarrior.com?

Jan 10, 2013 6:42PM
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Oh baby ..is it coming or what!!!! With the reelection of Bojangles and all his bros the smoke is gonna come up the hill very soon.Be prepared it ain't gonna be pretty.
Jan 10, 2013 6:17PM
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I have been a tax accountant since 1973 and have advocated a national sales tax, harder to cheat and trust me folks it is the poor that abuse our current system far more than the rich, but if people seem to think we are doomed in the stock market. why not get into annuities and find out how safe they can be??

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I think I will keep my Chevron stock all the way to the bitter end!

 

 

Jan 10, 2013 5:44PM
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The debt ceiling debate and thus inaction in mid-February will create a major upheaval in the market like we've not seen since the Fall of 2008.

 

Once congresss elects to do nothing once again and Standard and Poor's lower's the US credit rating....all bets are off. I see a market decline of over 1,000 points over a two week period in February.

 

i'll be in cash....waiting for a great buy opportunity!

Jan 10, 2013 5:44PM
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After America left the gold standard the economy thrived upon the accumulation of debt vs the accumulation of assets, causing  the prices of food energy goods and services to increase as Monetray policy devalued the dollar. As the boom and bust cycles emerged from that time the corrupt Fed was able to reboot the economy by inflating the financial system with more funny money. The corruption bubble has run its course and the crisis to cleanse the financial system of the individuals and institutions that benefitted will occur in 2013.
Jan 10, 2013 5:35PM
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Financially sound businesses have survived the recent recession and will be around for a long time. The governments inability to get spending under control and the massive debt that has resulted has created a lot of uncertainty in our country for businesses and individuals. When people do not feel comfortable about the future they play it safe and don't risk their money. This only results in a slowing of the economy and more uncertainty. If the idiots in Washington would just show some sign that they were addressing the overspending and had a plan to balance the budget our economy would grow. Right now nobody has any idea what the tax rates are going to be in the near future which makes it impossible to plan for anything. To bad we couldn't just stop paying everyone in Washington until they did their job and got our finances under control. Then maybe we could take a big loan from their private pension plan and make congress pay into social security and buy their own healthcare. Problem is they just are not affected by the problems they cause like the rest of us.
Jan 10, 2013 5:26PM
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be great for a crash, since when is a bottle of water  worth $2, pair of $30 shoes worth $185, makes no economic sense, rich stockholders and CEO's who create or produce nothing need to come back to earth, way too many freeloaders in the world, capitalism without consumers is doomed.....nothing will change until the working class is paid a LIVING WAGE !!!!!!!!!!!!! 
Jan 10, 2013 5:24PM
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Anyone watching the unemployment rate, not the 7.8 % but all those not being captured in the official published numbers can predict storm clouds ahead. New layoffs on a grand scale are announced daily and cuts in working hours reching epic levels maked anyone as accurate of a forecaster as we see in the media.

With over 350,000 new unemployment claims announced to day, the mainstream media was filled with terms like progress and stability. IFANYONE IS BUYING THIS PROPOGANDA CAMPAIGN THEY ARE EITHER INCREDIBLY STUPID OR CLINGING TO THE FANTASY THAT THE MESSIAH HAS ARRIVED. This is the same media that when 150,000 new jobs are created thay tout the phrase over and over that we are headed in the right direction.

No one knows for sure but a low grade moron taking time to connect a few dots should be scared silly.  

Jan 10, 2013 5:18PM
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Hey, you all sound like you own stock.  I've been in utilities since 2008 and I'm doing fine thank-you.  Sorry, I'm risk adverse, so when I'm being paid more than 10% dividend alone I'm out of the equity markets in everything else, but utilities.
Jan 10, 2013 5:13PM
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The best 3 are silver, ammo & canned food/bottled water
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