High Risk vs. Low Risk Ways To Play This Market

Last week the market saw the biggest sell off that the market has experienced in over two years.

Over the past year the market has recovered strongly after each one of these types of sell offs and has marched onward to new highs. We don't know if this time will be any different.

What we do know is that the oversold market is likely to bounce here. What we also know is that buying this bounce is very risky business for anyone other than day traders who close their positions before the market closes.

Right now buying this market is very risky. If it is going to recover, then let's let others assume the bulk of the risk while we focus on the least risky and most probable play in the market; shorting the strong downtrends that are now in tact.

Summary: Buying in anticipation of a full recovery is a very high risk strategy. Selling the downtrends in the transports, housing, and retail offers relatively low risk, high probabilitity rewards.

Those who ignore this are doomed to struggle with failed breakouts and support levels that refuse to hold.