At the open today I sold all of the double short ETF I own for clients. Actually I hit the button four minutes in.
For the first hour it looks ok but the thought process is a little different than that. I decided over the weekend (before Asia opened on Sunday night) that I would sell SDS if there was a down open on Tuesday.
When markets go in one direction for so long with such emotion they tend to correct back one way or another.
If the move turns out to be wrong the sale takes me to 20-25% cash for most clients. That sort of cash position riding down more decline gives a good chance for me to continue the streak of going down less but clearly if we plummet from here it would have been better to hold the SDS.
A common thread to action taken at points like this is that there may be discomfort with these moves. That is just how it works.
The reason I did not post this a little earlier is that I obviously cannot front run what I do for clients. The trade is long since executed and if there were any issues with it they should have arisen by now so I am able to disclose.
For long time readers I doubt this trade is a surprise.
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18 comments:
I saw the decoupling...and it was us! Now if I can just get someone to swoop-in and save my muni's from the monolines - sigh.
or was it a mild mannered helicopter pilot?
I didn't sell doubleshorts, but I resisted the temptation to buy more. It's hard to believe that this is the bottom.
the bottom? agreed.
a bottom for a couple of weeks; plausible and kind of normal but we'll see.
okay,
today market collapses are at best temporary because of an underling fact: parabolic inflation
if the parabolic financial system we now have continues then we will see the DOW at 100,000+ in our lifetimes, easily, and we will drive around in million dollar compacts so of course auto stocks will look appealing
why? fiat money
what the video(s) --- Money as Debt
--- Inflation
both on video.google.com
you think you are richer but in reality all you are doing is treading water
Trading SDS
__________
As old-timer Technical Analyst John Gambino opines:
"A rally from current levels could conceivably extend up to 1357 to 1367; a very tradable rally. That rally should then be followed by a demoralizing final leg down. I would refrain from any selling at current levels but look to sell the rally in the above mentioned range. A rough guess for the bottom is 1185 to 1145. Remember where you heard it first!"
......................
eh? seems like everybody is calling for a 25% decline, but if Gambino wants the credit, so be it.
btw - I heard Cramer (how can you not?) on the tube this morning. Seems he is now a bear, which might support the the case for today's 1274.29 being some kind of inter-generational low - lol!
I go away on a camping trip only to come back loads of excitement.
I just checked the models on sentimentrader.com and they're all in OS territory (surprise surprise). I haven't updated my models from last week but it doesn't look like much has change. There may be enough change in the sentiment models to push long exposure up a bit though.
Bottoms and panic: with a sell-off frenzy we might expect a turn-around. That doesn't seem the case yet. Down very far, very fast, yes, but today's close and volume suggests we have farther to fall. And, of course, there is also that 25% decline everybody talks about.
Anybody know of a good stock in crystal balls?
I would add that the 75 beep cut today, in conjunction with an almost certain 25 to 50 next week, suggests that the Fed knows a lot more about the mess than the public. Speculation on this adds to investor worries.
Call this the paranoia theory of investing.
John,
Respectfully, now that the "public" knows, I am going to start nibbling.
g
Roger,
It appears we're on the same page; re SDS, except I'd placed a limit sell a couple of points over Friday's close on Friday evening....when I saw what was happening overseas Monday night, I figured I'd get a GREAT execution, due to a gap down open. I agree that this isn't quite over, but would reinstitute the hedge after the "bloom" is off this particular rose....
Jan
PS: actually only missed the top tick by $.30...sometimes lucky is better than good.
I think this is just the beginning of the the dividend bubble's deflation. Whether it's by bear market or crash, I'm looking for a much lower price bottom. We'll see.
nowhere near bottom, it is kinda of obvious, cash is good, double short ETFs and Yen are going kill the market in 2008.
1.25 rate cut will launch energy and food prices into orbit, the Fed will report "low" inflation while Americans on the street will suffer $5 gallon gas.
I think we have further to fall, but this looks like a tradeable rally to me. I'm wondering if I put enough cash into the market today (37%).
Even bear markets rally and with helicopter pilots in charge of the FED...
I may be bearish, but I am not a permabear.
seg
Hi everyone,
This is the first time I have ever blogged so feel free to correct me if I unintentionally display any poor bloggers etiquet.
I noticed in this blog a few references to chart overlays/comparisons. What I haven't been able to find are spot forex charts that I can overlay on the S&P 500. More specifically, a chart that compares the Euro/Yen to the S&P 500.
Appreciate your responses.
yahoo finance is one that can do it.
the symbol for euro/yen is eurjpy=x
use that like any other symbol however the more esoteric cross rates will not chart on yahoo but euroyen should
Thanks Roger. I'll give that a try.
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