The Scale Just Tipped in Favor of the Bears The saga continues, though the plot thickens.  Guess what - I'm still bearish. That shouldn't be a terribly big surprise to any of you who've been around at least the last couple of weeks, as I officially went bearish on stocks (short term only) on May 13th, and detailed the opinion on May 20th. Today, however, the scale finally tipped in favor of the bears.  How so?  Back on the 20th I mentioned two potential events for the S&P 500 Index I'd be using as short/bearish triggers. The first possibility was a big surge all the way up to or above 930, which didn't happen. The other trigger would be a move under the 20 day line, which at the time was hovering at 891.  The next day, the S&P 500 closed at 888... under that 20 day line.  Technically speaking, that day was the official "I'm now bearish" day based on my rules, I don't think it would have been out of line to wait for some confirming evidence. We got it shortly thereafter.  For the four complete trading days after the 20th, the S&P 500 closed under the 20 day average for three of them. Barring a miracle today, the stat will be four out of the last five days (despite the market's gains I'm seeing as I write this).  The other anecdotal evidence of looming weakness is a string of lower highs for the S&P 500, and at least a lack of higher highs for other indices. The third peak - the one that clinched the idea for me - was Tuesday's high of 911.76. The market traded a hair higher on Wednesday, but most of the day was spent deep in the red.... zero follow-through.  That being said, I can't stress enough that I'm not ringing an alarm bell and begging our readers to bury themselves in a bunker. I'll leave the gloom and doom to the Roubini's of the world (though even Roubini has been uncharacteristically tempered of late).  No, this remains nothing more than a brief 'correction' call, which is apt to drag the S&P 500 down to the 38% Fibonacci retracement line at 830. That also happens to be a significant low from mid-April. If-and-when we get there, then we'll re-assess the situation.  If you're still hesitant to get on board my theory, the S&P 500 has thus far (in May) found support around 879. You could wait for that level to break before committing, though that only leaves about 40 points worth of downside potential to tap.    But How Do You Trade It? As for ways to play a downside move like this one, you've got several. Put options on indices and index ETFs (like SPY or QQQQ) would give you tons of leverage, or you could just short those ETFs if you have a qualified margin account.  However, I'm growing more and more attracted to our third option... leveraged, inverse ETFs.  I'm not going to teach a lesson on what they are and how to use them - if you're reading this, odds are you already know enough about leveraged ETFs. I will, however, give them an endorsement if you've not yet embraced them.  Though I love the leverage that options offer, with volatility cranked up the way it is, the premiums on most options are just ridiculous right now. Combining the fact that options expire and ETFs don't, and considering how nobody really knows how long a trend will last (I want to ride a trend long as it's alive), these specialty ETFs just offer a smarter risk/reward ratio.  This isn't a complete list of all the exchange-traded funds that would do the job, and absolutely not an endorsement of any of these companies, but these tickers should be enough to get you started. ProShares UltraShort S&P 500 2x ETF (SDS)  Rydex Inverse 2x S&P 500 ETF (RSW)  Direxion Russell 1000 3x Bear ETF (BGZ)  Of the three, I like the Direxion inverse ETF, as it provides the most bang for the buck ....though at the most risk. That being said, extreme caution should be used with any leveraged instrument - the risk is magnified just like the reward is. If you really want to spice up a portfolio with ETFs, each of the fund companies mentioned here also offers inverse sector ETFs. Don't be surprised if we tap one of those funds in the near future. I don't think ETFs will ever unseat stocks as a trader's instrument of choice, but they can certainly become a big part of a trader's strategy. Back to the main point though... the market looks like it's rolling over, contrary to what today's early strength would have you believe. I'd rather short into that temporary strength and set a tight stop, rather than chase a breakdown well after it's started.    From the Blog... Small Cap Airline Stocks Hitting a Headwind  Yesterday's Worst Small Caps Could Get Even Worse   The Supreme Court and Small Cap Stocks In listening to President Obama and the pundits talk Tuesday about Supreme Court nominee Sonia Sotomayor, one thing really stuck out for me: her depth in defending the intellectual property of corporations. Apparently this area of the law is one of her greatest areas of expertise and she has a long track record.  Nominated is one thing, confirmed is another, but today, the top Republican on the Senate Judiciary Committee said he doesn't foresee a filibuster against Supreme Court nominee Sonia Sotomayor. Unless something "pops up" from the past or she says something disparaging at her hearings, she seems, for all practical purposes, politically left on some issues and politically right on some issues and therefore somewhat; neutral. I like the idea she has care for and experience in intellectual property (a relatively new area of the law developed over the last 50 years)..... Read the rest on our new community pages.        Small-Cap Solar Stocks Dirt Cheap President Obama's greening of America has yet to take hold, especially in the solar sector. Wall Street basically had a love affair with it in 2007, handing triple-digit gains to a number of solar companies.  Then came 2008, and the first six months of 2009. Any green made by investors or solar companies faded away. This, of course, means that we're looking at some bargain prices at a time when the government should be earmarking all kinds of money to alternative energy. It's only a matter of time until the $5.5 billion earmarked by President Obama for alternative and clean energy, scientific research and various environmental projects turn the United States a darker shade of green. Convinced that a new era of prosperity can be ushered in by weaning America from its two century long energy-wasting habits, Obama vows to invest $150 billion in clean energy projects over 10 years and create 5 million new "green-collar" jobs. The bulk of Obama's $5.5 billion allocation will go toward installation of solar panels on Federal building roofs as well as to install high-tech energy meters and smart lighting systems that adjust to daylight. Government agencies will be on a pretty tight schedule. The following timetable shows the specific percentages and deadlines they must meet to increase renewable sources... Read the rest on our new community pages.