Before I get to defensive issues, I want to take a moment to highlight the phase of the US stock market that we seem to be in.

If the current US stock market results in a Mega Trend bear call*, then the current pattern is clearly the set up phase. Here are two charts - one from 2007 and one from today - that illustrate the point.

The top chart from 2007 shows the classic market topping action: six months of sideways action. What followed was a Mega Trend bear call that resulted in a 15 month bear market ending in March 2009 - some 55% lower. The bottom chart shows today's price action, which looks quite a bit like 2007: sideways churning for the requisite 6 months.

While it's advisable to anticipate a bear call it is not advisable to act before the fact. Jumping the gun is just not worth it. Besides, if the bear call comes, there will be lots of time to feast before the full hibernation takes hold.

*see prior posts.