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Defense Is the Best Offense: Pause to Be Expected, Najarian Says

Posted Jul 06, 2009 01:39pm EDT by Aaron Task in Investing
After three straight weeks of declines, the stock market was down again midday Monday, bringing some bears out of hibernation.

But Jon Najarian, co-founder of OptionMonster.com, isn't too worried about the recent action, saying the market is merely experiencing a natural pause after its huge rally from the March lows. "I don't see anything out there that's going to cause us to do that in the short term," he says.

That said, Najarian believes the market is likely to remain range-bound for the bulk of the summer and advises traders to take a more defensive stance, recommending health-care stocks like Cardinal Health and consumer staples like Wal-Mart. (Najarian was long both at the time the accompanying video was taped.)

For options traders, he recommends a "collar trade" of selling calls at or just above the market and buying S&P 500 puts - creating an "insurance policy" to protects you against a big drop, he says. "At a minimum what you want to do is lock in some of the gains you've got."

22 Comments

hot25fingers
hot25fingers - Monday July 06, 2009 01:57PM EDT

Dear Aaron, As a perpetual optimist, I must tell you that all the pundits are wrong. This country is in a sliding depression and nothing the government will do will get us out of this, King Obama notwithstanding! The only thing, as in years past to get this economy growing will be the private investment community and the opportunities developed by entreprenuers will get us out of this. More government intervention will never take the place of ingenuity and industry. Furtherm unless and until the uions are reighnedin, this country will become thirda world as is already planned by the Administration thus enabling it to gain as much central power as it can, not unlike Communist Russia and other Dictatorial states.

you
Yahoo! Finance User - Monday July 06, 2009 01:59PM EDT

Plunge Protection Team working overtime today... Check this out - they were warning about this whole mess back in 2004: http://www.rense.com/general52/secretsoftheplunge.htm

Ray
Ray - Monday July 06, 2009 02:04PM EDT

You can't make money if you spend it all on collars. Just buy at the bottom and stock up on asprin.

you
Yahoo! Finance User - Monday July 06, 2009 02:15PM EDT

Short-selling is the fastest way to make money. It is not the time to buy stocks. It is time to short-sell the weakest companies and sectors such as banks, insurance companies, GSEs and REITs until their stocks become pennies.

chubby
chubby - Monday July 06, 2009 02:17PM EDT

Collar-schmollar. Put out some iron condors and feast on volatility.

you
Yahoo! Finance User - Monday July 06, 2009 02:23PM EDT

Pause? What's he on about? Looks like a shoulder head shoulder, which is normally followed by a drop!

Warren
Warren - Monday July 06, 2009 02:35PM EDT

Current market is following my prediction month ago on thisblog that facing summer correction 7000- 8000 in W shape the second leg of price movement,due to disappoiintment in overoptimistic over stimulus resulted recession recovery. Trilion dollar bail, negative interest rate and stimulus created good bank, excess liquidity, double money supply growth only staying in banking, financial market, pushed stocks prices speculation over 40 %, double oil prices push mortgage rate higher, while business , consumers demand, housing prices, continue plunge dued to soaring jobless rate over 10 %.Corporate earning deteriorate due to falling demand and prices, tax rebate income turning into saving details on www.osawh.com/SP500.htm www.osawh.com/econ.htm www.osawh.com/mortdefa.htm www.osawh.com/macro.html

Joel
Joel - Monday July 06, 2009 02:36PM EDT

This is your opportunity. Stop trying to time the market. Buy a broad index and hold on.

Whit Chambers
Whit Chambers - Monday July 06, 2009 02:42PM EDT

Regan - supply sider and market takes off. Bush1 - tax increase impeded supply side approach. Clinton - minor tax increase offset by reduction in military (result was supply side policy). Bush 2 attempted supply side with minor tax reduction that was negated by Congress (particullarly when Pelosi took over which more than doubled spending)

Whit Chambers
Whit Chambers - Monday July 06, 2009 02:43PM EDT

Obama - increased taxes and non-supply side approach. Time to sell and not get back in until taxes and deficients are cut to fuel the economy.

Leo
Leo - Monday July 06, 2009 03:23PM EDT

Folks, it's Econ 101. The Fed cannot keep up the shell game of buying T-bonds ad infinitum. The rose-colored glasses gang is in denile if it thinks that it can. I don't care who's to blame...Dems and Repubs both got us into this mess. They both share the blame for fiscal irresponsibility at the Federal level. Point is that now we HAVE to stop the continuing insanity of issuing more and more debt and come clean on the toxic assets that the Fed, GS, and the Administration hope that you and I have forgotten about. Almost none of it has been written off, STILL! The stress tests were a sham, folks. If you think otherwise, you're deluded on just plain ignorant.

Leo
Leo - Monday July 06, 2009 03:27PM EDT

Correction: the rose-colored glasses gang is in denial, not de-Nile (but that's where they probably belong, because they're selling you something, like swampland in FL).

LegalizeMe
LegalizeMe - Monday July 06, 2009 03:35PM EDT

Audit the Federal Reserve and then get rid of it. The Federal Reserve has been our economies #1 problem since it's inception. Only the Federal Government can print money! It's in the Constitution people! The Federal Reserve is a private bank! How can this madness have gone on for so long! WAKE UP AMERICA! Call your congress men and woman and demand the illegal Federal Reserve system be dismantled!

STORMSTOCKER1
STORMSTOCKER1 - Monday July 06, 2009 03:38PM EDT

THE GOVERNMENT IS SPENDING FREE ENTERPRISES MONEY. YOU CAN'T ROB THE WORKERS/TAXPAYERS IN SOCIETY AND "GIVE IT AWAY" TO THE UNEMPLOYED, UNPRODUCTIVE PEOPLE......... IN SCHOOLS- WHY NOT GIVE EVERYONE A "C" GRADE REGARDLESS OF EFFORT? IF SOMEONE "EARNS" AN "A", OR AN "E", IT DOES NOT MATTER, ALL WILL BE "GRADED THE SAME""C", REGARDLESS OF THE STUDENTS EFFORTS; WORK HARD, OR BE LAZY, ALL WILL BE TREATED THE SAME........ITS SENSELESS SOCIALISM !! .

Richard
Richard - Monday July 06, 2009 03:44PM EDT

How come all these stock pickers are "Bald Headed" Goofballs? Also, here's a Yahoo Najarian video and a Yahoo Cramer video. Is YAHOO owned by CNBC?

Howard
Howard - Monday July 06, 2009 03:52PM EDT

Walmart is backing the Obama healthcare package and backs Acorn..... Shop 'Mom and Pop' stores if you can. I wish we could go back to those old times and shop family owned stores and keep the money in the local economy and local banks.

you
Yahoo! Finance User - Monday July 06, 2009 03:58PM EDT

It's looking like Goldman Sachs is the major culprit in the market manipulation shenanigans.

you
Yahoo! Finance User - Monday July 06, 2009 04:13PM EDT

Leo - Monday July 06, 2009 03:27PM EDTCorrection: the rose-colored glasses gang is in denial, not de-Nile (but that's where they probably belong, because they're selling you something, like swampland in FL). ::::::::::::::::::::::::::Nothing personal, but what good do comments like this do for anyone? You got to express that you believe you are smarter than others? You have no answers. All I see on here are gloomers who think they are smarter than others and calling people idiots, morons, etc. What makes you think people in here have rose-coloured glasses? Why do all Americans think they are so much smarter than anyone else? They seem to be incapable of engaging in civilized discourse. What happened? People used to be capable of respecting others here. Now, they always have to be making fun of somebody or lording over someone with derogatory comments. Pathetic. It's so...... incredibly American petite bourgeoisie.

Len T
Len T - Monday July 06, 2009 04:57PM EDT

Last week the CNBC experts said that the recovery will begin during October 2009. Time will tell.

James
James - Monday July 06, 2009 05:25PM EDT

Stop and think about who's really getting rich here?? And who's getting the air time?? I'll take a technician any day.....jim

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