The selling pressure continued Wednesday as the situation in Europe devolved into political bickering and social unrest. Tensions are rising on the streets in Spain, Greece and Portugal. And Eurozone and International Monetary Fund officials are becoming increasingly incensed with each other over disagreements on issues like a new Greece debt write-down, the Spanish bank bailout and the ECB's new bond-buying program. 

Stocks fell out of their multiweek stasis Tuesday with all the grace of ducks filled with bird shot as the U.S. dollar rallied against the euro. The drop in the euro unseated the entire risk-on complex of equities, commodities, high-yield bonds and precious metals, threatening to end the long post-June uptrend.

I'm recommending my readers and newsletter subscribers book profits (especially those big gains on precious metals), raise cash and consider a few short ideas in key areas of weakness, including retail, transportation and select industrials. 

Why the change of heart? The economic data still looks good. Indeed, consumer confidence surged and U.S. home prices posted their best year-over-year gain since early 2010. The economic data keeps surprising to the upside, yet stocks and bond yields haven't really followed, as shown in the chart above.

Yet some short-term measures have become overbought. Cyclical, economically sensitive sectors are weakening against defensive noncyclicals. Inflation expectations -- a proxy for growth expectations -- are falling off. T-bonds are rallying. And options traders are becoming increasingly pessimistic, pouring into put-option protection.

I can't say how long the downtrend might last. But with signals becoming mixed to negative, it's prudent to "turtle" your portfolio for now.

To take advantage of the situation, I'm adding new short positions in FedEx (FDX) and Rockwell Automation (ROK) to my Edge Letter Sample portfolio. 

Check out Anthony's investment advisory service The Edge. A two-week free trial has been extended to MSN Money readers. Click here to sign up. Contact Anthony at anthony@edgeletter.c​​​​om and follow him on Twitter at @EdgeLetter. You can view his current stock picks here. Feel free to comment below.