I am pretty bearish right now about next week. Micron tanked, DIS had an outside trading week, Master Card reported good numbers and sold off. When high flier market darlings like this start selling off its also a sign of impending correction.
Oil going up is bad, some Fed governors implied that a rate hike could be in the cards, the sub prime lenders are imploding, next week is options expiration week, and we had distribution days on all indexes Friday. That makes 3 for the Nasdaq recently, not good. I just feel that the market is like Scotty from Star Trek "giving it all she's got" but this time the dilithium crystals are not going to do the trick.
I plan to stick with AUY and SLV, maybe buy some CGR (a gold play), as well as maybe stick with some of my high fliers, but I wont buy anything in non energy or gold next week unless maybe its a 3SOF fast portfolio suggestion.
I might also get some QID ultra short fund, which allows me to short the QQQ without needing to actually short it. It was up 3.2% Friday on its largest volume ever.
Well, I hope I am wrong and would love to hear opinions as to why I am not, just thought it should be discussed. :)
hi,
i'll let the chart do the talking.
glta
maxi
Quote from: tokyopua on February 11, 2007, 02:41:21 PM
I am pretty bearish right now about next week. Micron tanked, DIS had an outside trading week, Master Card reported good numbers and sold off. When high flier market darlings like this start selling off its also a sign of impending correction.
Oil going up is bad, some Fed governors implied that a rate hike could be in the cards, the sub prime lenders are imploding, next week is options expiration week, and we had distribution days on all indexes Friday. That makes 3 for the Nasdaq recently, not good. I just feel that the market is like Scotty from Star Trek "giving it all she's got" but this time the dilithium crystals are not going to do the trick.
I plan to stick with AUY and SLV, maybe buy some CGR (a gold play), as well as maybe stick with some of my high fliers, but I wont buy anything in non energy or gold next week unless maybe its a 3SOF fast portfolio suggestion.
I might also get some QID ultra short fund, which allows me to short the QQQ without needing to actually short it. It was up 3.2% Friday on its largest volume ever.
Well, I hope I am wrong and would love to hear opinions as to why I am not, just thought it should be discussed. :)
I think you could be right. I too am just holding gold and other minerals stocks right now, those should be pretty safe. But, I think some plays in the medicine field might be pretty safe also.
Just to add one more thing, on his show Friday Cramer also felt that a big correction was coming this week.
Quote from: pompano on February 11, 2007, 05:49:44 PM
Quote from: tokyopua on February 11, 2007, 02:41:21 PM
I am pretty bearish right now about next week. Micron tanked, DIS had an outside trading week, Master Card reported good numbers and sold off. When high flier market darlings like this start selling off its also a sign of impending correction.
Oil going up is bad, some Fed governors implied that a rate hike could be in the cards, the sub prime lenders are imploding, next week is options expiration week, and we had distribution days on all indexes Friday. That makes 3 for the Nasdaq recently, not good. I just feel that the market is like Scotty from Star Trek "giving it all she's got" but this time the dilithium crystals are not going to do the trick.
I plan to stick with AUY and SLV, maybe buy some CGR (a gold play), as well as maybe stick with some of my high fliers, but I wont buy anything in non energy or gold next week unless maybe its a 3SOF fast portfolio suggestion.
I might also get some QID ultra short fund, which allows me to short the QQQ without needing to actually short it. It was up 3.2% Friday on its largest volume ever.
Well, I hope I am wrong and would love to hear opinions as to why I am not, just thought it should be discussed. :)
I think you could be right. I too am just holding gold and other minerals stocks right now, those should be pretty safe. But, I think some plays in the medicine field might be pretty safe also.
Just to add one more thing, on his show Friday Cramer also felt that a big correction was coming this week.
I saw that Cramer show just now too, had it recorded from Friday. But I had seen Fast Money already when I wrote this, and Eric Bolling was the one who pointed out the DIS chart, and how he felt next week could be tough. He was trader of the year for Trader Magazine, I always listen to him.
Also, I had already posted recently in "Look at the DOW" thread recently that I thought that tech stocks were due for a downturn by looking at the longterm $COMP chart :
Quote from: tokyopua on January 30, 2007, 07:32:10 PM
I am not worried about the DOW too much, but the $COMPX chart looks a bit toppy to me:
http://stockcharts.com/h-sc/ui?s=$COMPQ&p=D&st=2002-01-29&id=p69663617056&a=96399436&listNum=1
With the 3 distribution days in the Nasdaq, all you need is one or two more, which seems almost inevitable next week, and according to IBD principles a correction is really likely.
Not that the overall long term bull market trend would break, still a lot of positives from globalization, technology ,etc, but its not fun to have too many long positions in a correction, so its worth getting ready for it if the writing seems to be on the wall.
I have heard this as of late too. I guess the market is due for a correction but isn't long term holding always a good idea in case you are wrong? Is it also the opinion of some that the Main Portfolio may fall as a result in addition to the 3SOF? Do you think David has been thinking of this recently?
I think these are valid questions and hopefully David reads this thread and addresses it, I would be most interested in hearing his thoughts and analysis on the topic. I would rather sell all of what i have which is about 85& of what is in the 3SOF and Main stuff.
I have just seen such wonderful advances, I would hate to lose a good chunk of my gains at this point.
Is it just a market correction coming or the start of "The Next Rogue Wave"?
http://www.financialsense.com/stormwatch/2006/1215.html
Quote from: BigSully1 on February 11, 2007, 10:56:29 PM
Is it just a market correction coming or the start of "The Next Rogue Wave"?
http://www.financialsense.com/stormwatch/2006/1215.html
Thanks for sharing this link. Sobering stuff... the one thing I caught is that he said "expect this to begin in the subprime lenders" which is was all over the news last week. He wrote the article on December 15th 2006, so was pretty spot on in predicting that only 2 months later... hope he is wrong about the Rouge Wave scenario lol. :o
some more commentary and charts;
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1926808
Quote from: tokyopua on February 11, 2007, 11:21:50 PM
Quote from: BigSully1 on February 11, 2007, 10:56:29 PM
Is it just a market correction coming or the start of "The Next Rogue Wave"?
http://www.financialsense.com/stormwatch/2006/1215.html
Thanks for sharing this link. Sobering stuff... the one thing I caught is that he said "expect this to begin in the subprime lenders" which is was all over the news last week. He wrote the article on December 15th 2006, so was pretty spot on in predicting that only 2 months later... hope he is wrong about the Rouge Wave scenario lol. :o
Jim Puplava has been writing those articles since 2001 and I read most of them. He has been wrong since early 2003. We're in 2007, that's 4 years, a long time for a man to be wrong.
Someday he will be right, but I don't think it is in the near future. It can be 10 years from now.
I know your bearish concerns and that might keep you from making as much money as you ought to (it can even make you lose, if you employ leverage), by being a bear in a bull market. Moreover, that QID product is the worst financial product I could think of buying. It can not only go to $0, but to negative values in my opinion, or else it doesn't do what it is meant to do, that is, short the Nasdaq 100 with two times leverage.
I'm a bull in a bull market and will remain a bull for as long as it a bull. Corrections don't matter, you can't time them, only lose your position in the main trend.
Someone asked for my opinion on the subject and I gave it. Anyway, good luck :)
Quote from: rickjust on February 11, 2007, 02:59:10 PM
hi,
i'll let the chart do the talking.
glta
maxi
Hmmm, looks like after David's post I need to reconsider my buy on QID longer term. But for now, its interesting how the H&S top rickjust pointed out corresponds to the inverse H&S pattern I see on the QID. I am in QID at 53.31 this morning, and aside from CPNE and a quick daytrade on ONXX, its the only green I have been seeing all day.
I know your bearish concerns and that might keep you from making as much money as you ought to (it can even make you lose, if you employ leverage), by being a bear in a bull market. Moreover, that QID product is the worst financial product I could think of buying. It can not only go to $0, but to negative values in my opinion, or else it doesn't do what it is meant to do, that is, short the Nasdaq 100 with two times leverage.
Someone asked for my opinion on the subject and I gave it. Anyway, good luck :)
[/quote]
I think your only seeing the UltraShort ETF's as a horrible LT investment, and absolutely rightfully so. But I see them as highly effective ST to MT defensive or hedging tools employing much of the same strategy used by hedge funds and institutions. In fact I strongly suspect there is high institutional interest in these.
"I'm a bull in a bull market and will remain a bull for as long as it a bull. Corrections don't matter, you can't time them, only lose your position in the main trend."
Using the UltraShorts, you don't necessarily have to lose any long positions, agressive or not, you can hedge against them and perhaps more comfortably stretch out capital gains for a longer period, maybe even turning ST gains into LT. JMHO.
I used to read a lot of online bloggers relating to the stock market. At the height I had more than 20 bookmarks on my browser in that category. More than once I was convinced that "doomsday is coming!" and sold a few stocks or exchange some mutual funds into money market funds, only to see the market going up again.
The problem I now see is that online bloggers have a bearish bias! (Somewhere I read the same conclusion a few weeks ago, but I couldn't find the link anymore). Bearish comments make a nice story, and a "crash is imminent!" warning catchs eyeballs. It is almost the same reason why TV headline news are mostly negative (at least in America anyway).
Last summer when the market was pulled back (not even a hugely severe one), most of these bloggers were extremely negative, and most of them turned out to be wrong. Besides self-serving purpose I think why they were wrong is because they relied too much on technical analysis. Technical analysis might be successful here and there on a short timeframe, but in order for a major bear market to occur, there got to be convincing fundemental reasons!
David has laid out its bull-market thesis a few months ago. And the only other source I rely upon (Bob Brinker's Markettimer) these days continue to be bullish (by the way, he called a buying opportunity for S&P below 1250 last summer). As long as we are still in a bull market, I wouldn't care too much about a profit-taking driven correction. Moreover, a good stock in a correction should hold up well and come back stronger in the next upturn. And this is even a good opportunity to weed out weak stocks and replace them with fundementally stronger ones!
Although one day does not make a wonder, I am very happy looking at the stocks in the main portfolio today: half of them are actually up today on a down market! That tells a lot about the quality of David's picks.
I want to point out that my original post was not based on any newsletter or blogger, rather my own observations.
I sat through the correction last time gradually getting shaken down and didnt enjoy it. I agree a correction doesnt necessarily mean a bear market, but lets say for argument sake you could time a correction, isnt it better to sit it out until an uptrend starts again and you can be assured of making money?
I think the question then becomes whether you can tell when a correction is going to happen. I dont claim to be able to do that, but IBD does seem to have a good track record doing that by counting distribution days. They show how it worked to predict the 2001 peak.
They define distribution days as a day when one of the major indices is down .2% or more on volume that was greater than the prior day. This is supposed to be a sign of institutional selling. Get 3 of these in 4 weeks and they advise caution. Get 4 or 5 and they tell you to go to cash. We are at 3 for the S&P and Nasdaq so far. Add to this all the other factors I cited in my original post, and that is what has me thinking the correction is going to start.
I am not worried about a Rogue Wave or major crash, just losing more money than I have to if indeed a correction is starting. I do agree that some clear growth stocks like SYX can still be held through corrections, but I dont want to hold anything that I am not damn sure of. The correction last time shook me out of everything I was in. I can maybe tell myself I will have the strong hands this time, but its different when you are looking at red day after day, you can forget your resolutions from a few weeks ago when you still saw some green.
Anyway, I am just sharing my perspective from the one correction I ever expereinced. I am a novice trader, only been at this game for 18 months. A veritable babe in the woods compared to David and some others here. All I have is what I have been through personally.
All this being said, I guess the crux of the debate here is whether you can possibly time a correction.
As such, I am curious if anyone else follows the IBD distribution day theory? I could probably ignore all the other glaring signs but that right now. It sure would have saved me some money last correction, and I hope it will again...
QuoteLast summer when the market was pulled back (not even a hugely severe one), most of these bloggers were extremely negative, and most of them turned out to be wrong. Besides self-serving purpose I think why they were wrong is because they relied too much on technical analysis. Technical analysis might be successful here and there on a short timeframe, but in order for a major bear market to occur, there got to be convincing fundemental reasons!
Nice thought realcoolhead. I think you're close, but not there yet. To understand why they were wrong you need to grasp the Contrary Opinion Theory. I read several books on the subject. They're mostly oriented for futures traders (who trade the stock market indexes, like the S&P500 and the Nasdaq 100, through the ES and NQ futures), but can also be helpful for stock market traders that want to try to time the market.
The problem is that the "hall of fame" of the stock traders don't try to time the market, they don't care about the general market trend to judge their investments, because they invest in the perspective of the business.
QuoteAlthough one day does not make a wonder, I am very happy looking at the stocks in the main portfolio today: half of them are actually up today on a down market! That tells a lot about the quality of David's picks.
Thanks realcoolhead :) I hope you're still holding SYX and all others with strong hands.
Tokyo, you look like me when I had 18 months in the stock market. Looking for everything around, studying several strategies to make the most out of my money. Getting excited about new indicators, strategies, strategists. I think it is a journey you need to take to fully understand the game.
But I tell you that in my 11 years of experience, I spent several years studying hard and thinking I had something and no, I was wasting my time. The time I took to learn the game (obviously, I'm still learning), was a lot longer than what it could have been, had I been somewhat more, how should I say it, conservative?
I wonder, you want to try to time a general market correction to save some money or else do you want to do it to make more money than what you've been doing?
One of the things I've learned (but it took me several years, unfortunately), is that the trend is your friend, and the trend doesn't change until it has changed. If you look at the chart of the SPY below, the trend is bullish.
One always thinks he can get out when a correction starts and then get in lower when the bull begins again. My believe is that this is an illusion. A bull market is made with few big gaining weeks, and if you miss one of those because "a correction is due", you miss the biggest part of the move. You end up making a $4 profit in a $20 move, as Livermore explains.
As for the QID, if the Nasdaq 100 rises 50% from this point the QID will be worth $0. And if the Nasdaq 100 rises 50%, it will still be 45% below its all time high set in 2000. In fact, the Nasdaq 100 needs to rise 175% to approach a new all time high. I don't know when will the Nasdaq hit a new all time high, perhaps that will be just 10 years from now (the Nasdaq would need to rise 10.6% a year, on average), but that is the trend! Or do you think the technology sector in the US will never be at its highs again? Think again, the history tells you the bulls always win over the long run, because losers fade away (I mean, losing stocks). It also has to do with the way the indexes are constructed.
There's a lot more to say about this subject. We'll keep talking, thanks for the thread :)
I find this thread interesting and this is probably coming out at the right time due to a lot of US media proclaiming the market is due for a correction and having many people indulging in this theory.
The one thing I have found interesting is the recent conversations regarding gold. Not holding gold mining companies but actual gold or gold certificates for those who have IRA's. I am to understand that having companies that mine for gold are not all that safe in certain market's due to political volatility, such as the recent coupe in Figi and them taking control over the mining in that country.
In regards to protfolios and having actual gold or again, gold certificates (maybe that is not the right name of that but it's just the same as holding real gold but in IRA's). Any opinions or suggestions as it relates to this?
Quote from: David Randolph on February 13, 2007, 03:59:19 AM
Tokyo, you look like me when I had 18 months in the stock market. Looking for everything around, studying several strategies to make the most out of my money. Getting excited about new indicators, strategies, strategists. I think it is a journey you need to take to fully understand the game.
But I tell you that in my 11 years of experience, I spent several years studying hard and thinking I had something and no, I was wasting my time. The time I took to learn the game (obviously, I'm still learning), was a lot longer than what it could have been, had I been somewhat more, how should I say it, conservative?
I wonder, you want to try to time a general market correction to save some money or else do you want to do it to make more money than what you've been doing?
One of the things I've learned (but it took me several years, unfortunately), is that the trend is your friend, and the trend doesn't change until it has changed. If you look at the chart of the SPY below, the trend is bullish.
One always thinks he can get out when a correction starts and then get in lower when the bull begins again. My believe is that this is an illusion. A bull market is made with few big gaining weeks, and if you miss one of those because "a correction is due", you miss the biggest part of the move. You end up making a $4 profit in a $20 move, as Livermore explains.
As for the QID, if the Nasdaq 100 rises 50% from this point the QID will be worth $0. And if the Nasdaq 100 rises 50%, it will still be 45% below its all time high set in 2000. In fact, the Nasdaq 100 needs to rise 175% to approach a new all time high. I don't know when will the Nasdaq hit a new all time high, perhaps that will be just 10 years from now (the Nasdaq would need to rise 10.6% a year, on average), but that is the trend! Or do you think the technology sector in the US will never be at its highs again? Think again, the history tells you the bulls always win over the long run, because losers fade away (I mean, losing stocks). It also has to do with the way the indexes are constructed.
There's a lot more to say about this subject. We'll keep talking, thanks for the thread :)
Thanks for the reply David. I agree that right now I am looking in many areas for new information and there is some extent to which I am getting too much information. That is probably even easier for me at 18 months in than it was for you almost 10 years ago due to the internet, lol.
My goal is not to make more money than I could, it is to save money. In the last correction I didnt even know after it started that there was such a thing as a correction, and I kept holding and hoping. I think just educating some of the newer members that markets correct from time to time in bull markets is a good thing, so if this thread does nothing more than that and we continue the bull market unabated, I will be happy with that.
I totally agree that the general long term charts on all indices are still bullish, and I have absolutely no doubt that technology in general will drive markets to new highs over the years, even higher than most investors can fathom. I am reading a book called "The Singularity Is Near" by Kurzweil which has almost nothing to do with stocks, but it does outline the paradigm of accelerating acceleration in the evolution of technology. This cannot help but push markets higher, I am probably more of a bull than most people after realizing this.
So as far as my 2 day old forray into the QID, its just a hedge, and like any other stock I will sell it if it goes down past acceptable limits, it is not a long term investment. Today my portfolio is green again with 7 other long stocks, and QID is losing me all of $10 dollars total lol.
I just dont want to lose money in a correction if it can be timed like IBD says it can. I saw their method work to somewhat time the last correction, and they also were able to say that a new rally had started in earnest last summer. So im my 18 month stint, they became the authority on that. It should be noted that they have not yet called a correction, but the pieces in terms of distribution days are in place. I still think we get one more this week, and then that is 4 days in 4 weeks.
So I am still a bull, just a cautious one, ready to be a bear for a few months if I need to be if a correction happens.
Looks like the correction started, the other way lol :)
I sold QID this morning early on. I realize I dont like the idea of hedging. Its wierd to look in your portfolio and be rooting for the market to go down so one stock goes up while you want the market up for all the rest to go up. New experience, new learning.
Still not sure we are out of the woods yet, Friday could be pretty crazy given the two huge up days we had so far. $NDX back about the 50 sma, so Im now cautiously optimistic....
Wait to short till summer, historically summers have been bad for the market. Also the real estate situation will unfold more over the summer if nothing is selling and the situation is just getting worse.
Today is the first time since August that the $SPX and $DJI have even touched their 50sma, and are now fairly well below them. The distribution day indicators I mentioned are not a factor on the 4 week outlook, but maybe they still are an issue if you go back 6 weeks.
Anyway, still too early yet to say the correction has begun, but the moving averages getting breached for the first time is something worth watching going forward. Nonetheless, I sold many of my high beta stocks at the open today and took profits. Mostly I have gold and sliver stocks left. ::)
Its a tough day, GLTA
I sold my last 2 metal stocks and am in cash for the first time in about 18 months. It actually feels good even though I lost money compared to the last few days, but I still have nice profits for the year so far, quite happy with that.
Today is what I was preparing myself for with this thread. It allowed me to sell almost all my stocks right at the open and avoid even worse losses than I might have had. During the last correction I just couldnt bring myself to sell, this time I didnt mess around, I just cut them loose.
I think the answer to the title of this thread is yes, the correction started. If nothing else, today in itself is a correction, and there might be a little bounce, hopefully there is. But in technical terms, there is still more downside likely.
Having sold 75% of my portfolio yesterday I decided to pull the trigger on the remaining 25% this morning at the open. I'll be putting most in a 6 or 9 month CD as a way to batten down the hatches and get sleep at night. Correction? Yes, I'd definately say so.
I also sold all my 11 holdings, I'm all cash right now, ready for the bear side. :D
Applauds capricho and Terliso, looks like we managed to miss the worst of this super drop that just happened. As crazy as this is, we are witnessing history here. :o
Glad all you guys are managing to keep your cash safely on hand.
As I posted some days ago have a strong investment in QID
nevertheless feel sorry to see some of my profits gone today
in CGR, MSI which I sold this afternoon and regret that waited
too long to get rid of DIET.
Now I'm also 70% in cash.
Good luck to all
To bad I didn't see this video earlier, this guy was kind of predicting this collapse last week, excellent video!!!
http://www.redoption.com:80/shadow_video.php
Today was the highest volume ever for down-day in Nasdaq history, past 3 billion. :(
I see a little too much panic out here. Maybe it's justified, maybe it's not. I read from David's post on the closing thread of todays actions that he has his doubts and that concerns me that within hours one's whole perception on the market can change. We had a correction today, granted a huge correction and I did lose big. I unfortunatell do not have the advantages of watching this alot and should have sold this morning but who knows. This crap in 20/20 at best. The next few days will be a better indicator of what's to come I think.
I think a good night's rest is in order for us who got the crap kicked out of us. I am still up for the year but down considerably from a week ago. I am down 12% in one week.
I hope David can asnwer the statement made earlier today that good stocks will rebound nicely and the crap will do crap. Also, this looks like a technical move more than a fundamental one, will not fundamentals prevail and those are the factors we should be looking at?
I also do not wish to lose anymore so who's to say what I will do tomorrow but I don't also want to sell this stuff only to find out I need to buy it back a week from now at much elevated prices.
I hope this thread gets many posts from a lot of people tonight to see where there thinking is on this? I also am sure this will depend on if you are a long term holder or a swing trader. I would like to see that disclosed as well since it may indicate the state of thought too.
What would Buffet do? What did Buffet do?
Good questions Lancefur.
I suspect that you are right that this is not fundamental, rather technical. However, a correction did happen, and may well continue for awhile. My feeling is we simply need to keep our eyes on China. Their chart is a bubble, and that simply has to pop. While it does, it will have some reprocussions around the globe. If they drop again overnight the crazy thing is that the market here can gap down again.
The thing that got me to start this thread more than anything else was the distribution days which IBD taught me to track. It was what had me ready to sell all my stocks and not ask questions like I did last time. Since they helped me prepare for this, I believe they can also help me prepare for re-entry to the market. They have a technique for that too, and as I mention in this thread, it worked to to time getting back in after the May 06 correction.
I will share in this thread tonight the IBD Big Picture article, and see what they have to say.
I sincerely wish that everyone who participates here at 3SOF can minimize any possible losses going forward, and that we can all come together to form opinions and advice that will help in that process. I will do my best in that regard.
I view today as a blessing. There are so many undervalued stocks out there that took a severe beating today and probably will for the rest of the week. This correction is a great opportunity to pick up some cheap shares in some great stocks.
I realize its hard to predict where the market is headed. My opinion tells me this is a short-term correction that could last for several days or weeks. One thing I'm going to do is study the old threads (if I can find them) from the last big correction that happen last spring. I'm only doing it for a reference, just to see what the indicators were and everyone's opinions. Then compare the opinions to the actual outcome. Another thing I learned from the last big correction was find a good short, a company with alot of outstanding shares and high-priced. For example, Last spring I shorted 1000 shares of JOYG when it was falling, but due to inexperience I kept covering and re-shorting each time the stock moved back up. I still made some money, but if I had kept my short just for a week, I could have grabbed a 10 point downturn. So this time if the market has another bad day tomorrow I'm thinking of shorting JOYG or PCU since they seem to go down big. Also they are coming off their 52 week highs. I understand that both companies are good fundmental companies, but in a time of corrections, it doesn't matter for the short term. The long-term is still good for both of these companies. My advice is to take it slow and don't feel like you have to get back in the market right away. I still believe that David should continue the 3 stocks on fire board everyday since there will still be tradeable stocks on a daily basis. Gotta go eat dinner, Good Luck Everyone!
I think the biggest question is whether this is yet another bull market correction, or the beginning of a new bear market? Of course no one can be 100% sure, it seems David begins to think the later and mentioned a viable bear market strategy is demanding much cheaper valuation. Among stocks in the main portfolio, ASPV, WCG, OFI, MSI might qualify? Technology stocks are hard to evaluate since they are too cyclical, so I don't want to include AMKR, SYX, ARRS, SILC etc...
I think even if it turns out to be another bull market correction, there is more on the downside as S&P only went down 4.3% from its top reached a few days ago. Tonight a lot of people go home and realize we just had a huge down market and many people will naturally pick up phones to their brokers ... it is just people's nature.
Quote from: realcoolhead on February 27, 2007, 06:04:45 PM
I think the biggest question is whether this is yet another bull market correction, or the beginning of a new bear market? Of course no one can be 100% sure,
That was a good question.
I think the answer is --
We are currently in another bull market pullback. ;)
see the chart:
Quote from: realcoolhead on February 27, 2007, 06:04:45 PM
I think even if it turns out to be another bull market correction, there is more on the downside as S&P only went down 4.3% from its top reached a few days ago. Tonight a lot of people go home and realize we just had a huge down market and many people will naturally pick up phones to their brokers ... it is just people's nature.
On CNBC at they reported that futures orders were already 250% greater volume than normal volume for tomorrow (again, supposedly there were orders backed up). Add to that what you mentioned and whatever may happen in China, and tomorrow is indeed set to open lower. Since China had their trading stopped apparently, it also means that they are likely to drop tomorrow as well. Vicious circle >:( :'(
On thing this has taught me was that the supposed "curbs" arent as strong as I thought. What I naively thought was that the curbs would stop trading sooner, but apparently a 500 point drop intraday is still possible and maybe more.
Ok, with all that is said thus far and knowing the current stocks on the MAIN, would it be wise to wait until after the open and sell all or wait for an hour and then sell? Maybe the market will recover from the overselling from the day before? That is if I were to sell all and go to cash...I don't want to do that for fear of an uptick tomorrow but then again, I really can't afford another drop like this in one day again for sometime.
I was also noticing some discussions on another index indicatior which hit 58%/53% and normally 18%...it was like VXX or something...memory foggy from losing so much money today.
Hi all,
Here is the article I promised from my IBD account, (it is called The Big Picture). They dont question at all that today broke the rally, despite the fact that the distribution days dont add up yet (see my other posts in this thread about those if you dont know what they are, I think its a must know for all investors).
They suggest being off margin and raising cash levels.
-------------------
China Triggers Global Sell-Off
BY JUAN CARLOS ARANCIBIA
INVESTOR'S BUSINESS DAILY
Posted 2/27/2007
A plunge in Chinese stocks and a troubling U.S. factory report slammed Wall Street on Tuesday, its worst day of losses since the bull market began in 2003.
The Nasdaq gapped down at the open and kept deteriorating, closing with a 3.9% loss. The S&P 500 dived 3.5% and the Dow 3.3% amid broad weakness in the world's bourses.
Volume exploded on U.S. exchanges, leaving no question that powerful institutional investors sold major holdings.
In less than four minutes, around 3 p.m. EST, the Dow plummeted 254 points as a backlog of sell orders made their way through the ticker.
Tuesday's fissure ended the rally that began with the market follow-through on Aug. 15. The sell-off also erased all the main indexes' gains for 2007.
There was no refuge for investors, and many ghastly statistics.
Only two stocks in the S&P 500 closed higher. All 30 Dow industrials fell. All 197 IBD industry groups closed lower.
The selling started overnight in China, where the benchmark index plunged 8.8% — its worst loss in 10 years. Some blamed the Shanghai selling on talk of new government steps to curb the country's surging economy.
Then, before the opening bell on Wall Street, U.S. durable goods orders were reported down 7.8% in January. That was far worse than expected and fanned fears the U.S. economy is slowing.
Bond yields tumbled as the 10-year Treasury slumped 12 basis points to 4.51%. Expectations of a Fed rate cut surged. In the fed funds futures market, the chance of a rate cut by the end of June swelled to 72%. It was at 21% Monday and at 2% two weeks ago.
The headlines out of Asia landed a direct hit on Wall Street's leadership. Chinese and other foreign stocks, which had been outperforming in the U.S., took some of the heaviest blows.
The finance sector, another area of leadership, was among the day's worst performers too.
Tuesday's meltdown came after the market had given some encouraging signs, even though its progress was often frustrating.
Through Monday, the Nasdaq and S&P 500 had just one distribution day of higher-volume selling over the past four weeks. The indexes were near 52-week highs. Most leading stocks had avoided big sell-offs.
Yet there's no question Tuesday's massive selling marked a turn in the market. Conditions are no longer right for buying stocks.
The charts of many leaders were left scarred and giving sell signals.
Foreign leaders such as Mindray Medical, (MR) Home Inns & Hotels (HMIN) and Homex Development (HXM) gapped down on heavy volume.
Some top-rated stocks such as Copa Holdings (CPA) found support at their 50-day averages. But the Panamanian airline's Accumulation/ Distribution Rating dived to a weak D from an A three days ago. Stocks of leading airlines started having some troubles last week.
Big drops below support levels are sell signals that take on even greater alarm given the market's new bearish tone. Prudent investors should be off margin and raising cash levels.
The IBD 100 slid 5.8% Tuesday, as just one component, Dawson Geophysical, closed higher.
It may take some time before top-rated stocks set up new buying opportunities. In 1997, the Asian currency crisis triggered a three-month correction in U.S. indexes. One difference this time is that China's economy is sizzling.
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Just answered my own question (I was typing below). It would have been instructive to be checking the $VIX today.
So this is one lesson I think I have learned today:L
The next time I see a big down day seeming to form like today, I wil be monitoring what the $VIX is doing intraday. If I start seeing a spike like this one, I will sell. As it happens I had already sold everything on gut feeling, but this looks like it was a damn good indicator considering that the spike happenend at 2 PM and the fast drop happened at 3 PM.
-------------------------------------
Does anybody know how you can track the Volatility Index realtime, say for example on a platform like Etrade Pro? Apparently the .VIX spiked today at 2 PM, so that must have been a bit of a clue of what was about to happen at 3 PM.
If you are subscribed to yahoo, can have streaming real time
quotes of this index under the ticker:
CBOE VOLATILITY INDEX (^VIX)
Quote from: jorgegr on February 27, 2007, 10:54:01 PM
If you are subscribed to yahoo, can have streaming real time
quotes of this index under the ticker:
CBOE VOLATILITY INDEX (^VIX)
Thanks, I also realized I could pull it up in Etrade, I guess I just didnt know the symbol until today for that, i.e. $VIX.
Apparently you can trade the VIX somehow? If so I guess today they made a killing on it, wow, up 64%. Just heard on Bloomberg TV just now that this was the largest jump ever on the VIX.
Nice.
But it seems there were lots of false 50SMA breakdowns. Does it also require, say, 50SMA sloping down?
Quote from: Terliso on February 27, 2007, 06:27:26 PM
That was a good question.
I think the answer is -- We are currently in another bull market pullback. ;)
see the chart:
No Tokyopua, as far as I know this is just an index
can't trade it. Never seen "VOLUME" on any statistic.
Suggest you compare $VIX to QQQQ and QID.
You will see when to invest in QID,
But also take a look at SDS and DXD
Quote from: jorgegr on February 27, 2007, 11:50:33 PM
No Tokyopua, as far as I know this is just an index
can't trade it. Never seen "VOLUME" on any statistic.
I see, what had me confused was the times I have heard the term "trading the VIX", but what that means is using it as an indicator to trade:
"If you prefer futures trading, buy S&P 500 index futures when the VIX approaches 50 and sell S&P 500 index futures when the VIX approaches 20. If leveraged options speculation is your game, buy index calls when the VIX spikes to 50 and sell them and then buy puts when the VIX slumps to 20. If stocks are where your heart lies, go long index tracking stocks (like S&P 500 Spiders (SPY), NASDAQ 100 Cubes (QQQ), or Dow 30 Diamonds (DIA)) when the VIX stalks 50 and sell when the VIX crashes back down to 20.
Regardless of how you play the speculation game, it is easy to use the VIX to ensure that you are almost certainly on the right side of the short-term market trend, whether it portends farther bear market plunges or exciting bear market rallies."
I am learning a lot of new things today, but it was an expensive tuition :'(
yep that's how I play it
A bloody day. I'm in China and has been watching the financial channel til now, 13:15 here. Right now, shanghai composite is 1.48% up with more ups than downs. Government has just cleared a few rumors which will make stocks down. So market is up again. The hot sectors today is 3G, energy.
The analysts predicted that the down is a correction of bull market, many stocks are still undervalued (I don't agree with this, though). The future market will be a heavy ups and downs between 2500-3500 (shanghai composite index).
Anyway, I don't think this is justified. Shanghai composite index tripled in one year, a 10% correction is all it deserves. But did the major indices in the USA triple in the same period? ;D US markets over reacted.
I added more positions yesterday...it's a hard, but I did
nearly 2 percent up now, people begin bargain shopping
Quote from: chinaguru on February 28, 2007, 12:27:38 AM
A bloody day. I'm in China and has been watching the financial channel til now, 13:15 here. Right now, shanghai composite is 1.48% up with more ups than downs. Government has just cleared a few rumors which will make stocks down. So market is up again. The hot sectors today is 3G, energy.
The analysts predicted that the down is a correction of bull market, many stocks are still undervalued (I don't agree with this, though). The future market will be a heavy ups and downs between 2500-3500 (shanghai composite index).
Anyway, I don't think this is justified. Shanghai composite index tripled in one year, a 10% correction is all it deserves. But did the major indices in the USA triple in the same period? ;D US markets over reacted.
I added more positions yesterday...it's a hard, but I did
Cool to have someone actually in China share their perspective!
You may well be right, this could all be an over-reaction that got compounded by computer glitches, etc. But I will likely wait till IBD tells me we are back in confirmed rally mode here in the US before I go long again.
Rest of Asia is still tanking though, Japan, Singapore, Australia all down bad as I watch Bloomberg now....
Today was anything but pretty to say the least. Dropping my portfolio around 7.5% which makes that the biggest one day decline i think i've ever witnessed in my trading career. Several factors played a roll in todays decline.
Quoted from an article on MSN:
Quote* An overbought stock market. The stock market had gone more than four and a half years without a correction of 10% or more. Plus some sectors, especially materials, had enjoyed huge gains and were ripe for profit taking. Gold and copper stocks were hit very hard. Freeport-McMoRan Copper and Gold (FCX, news, msgs) fell nearly 10% to $55.75. Rio Tinto (RTP, news, msgs), the global mining giant, was down 6.7% to $215.13.
* Higher oil prices. Crude oil jumped 32 cents a barrel to $61.46. So far in February, crude is up 5.44% after a big sell-off in January. The Dow Jones Transportation Index ($TRAN) fell 3.4% today and has fallen more than 6% since hitting a record 5,178 a week ago.
* Concern about housing and subprime lenders. Traders are obsessed about how deep the housing slump that began last year will go and how vulnerable lenders are if large numbers of mortgages go bad. One result: Big brokers and banks have been pummeled. Goldman Sachs (GS, news, msgs) fell 6.7% to $199.76 today. Lehman Bros. (LEH, news, msgs) was off 4.7% to $74.19. The Amex Securities Broker/Dealer Index ($XBD.X) fell 4.4%.
* Alan Greenspan. The former Federal Reserve Chairman said yesterday that the U.S. economy faced a risk of a recession later this year. "When you get this far away from a recession, invariably forces build up for the next recession, and indeed we are beginning to see that sign," Greenspan said via satellite link to a business conference in Hong Kong. Greenspan didn't say a recession was imminent, but traders didn't care.
* Disappointing economic news. Here the culprit was a report that new orders for durable goods plunged 7.8% in January, more than the 5.5% drop expected by economists. Durable goods rose a revised 2.8% in December. A big drop in airplane orders at Boeing (BA, news, msgs) was the biggest contributor, but even without Boeing, orders had fallen 3.1% last month, the biggest drop since July 2005. Boeing was off 1.9% today.
Technicals(http://**********.net/forum/index.php?action=dlattach;attach=1895;image)
On a 6 month chart the COMPX was trading steadily in a bullish ascending channel in which price was attempting to make a 3rd stab at the upper resistance line. Technicals suggested a pullback from here but we got a lot bigger pull back then we bargained for. Pummeling strait through the ascending support line of the channel as well as the 50ma. Suggesting bearish behavior in the near future.
(http://**********.net/forum/index.php?action=dlattach;attach=1896;image)
On a 1 year chart we see the COMPX decline was halted at support near 2400. So we could possibly expect to see some stabilization right here. But with such a powerful move on the nasdaq's most heavily traded session in history and the largest decline in stocks since the market opening after 9/11. I think The COMPX dropping near 2300 support is more realistic.
(http://**********.net/forum/index.php?action=dlattach;attach=1897;image)
On the 3 year chart we see that price has been trading in a mini channel over the last 4 months within the much larger channel that the compx has been associated with over the past 3 years. Price has been hugging the upper resistance line of the 3 year ascending channel struggling around 2500. I predicted back in November that 2500 may be the mark before a real correction.
Quote from: fous on November 06, 2006, 12:24:52 AM
Notice on the longer term chart price still may continue north to retest the top resistance line of the ascending wedge just south of 2500 before we might see the real correction if and when it comes. Man it would be great to have another 1999;)
-fous
(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=27670;image)
On the past 2 tests of the upper resistance line of the 3 year channel price has declined fairly rapidly for a large correction. So with this huge sell-off today along with record breaking volume. I won't be surprised at all for this to be the 3rd leg of a major correction in the bullish channel.
So as of right now its very difficult to predict what the market is going to do. Which is why i sold a lot of my positions today. I feel that the markets will be volatile and highly unpredictable over the course of the next weeks. This kind of reminds me of the beginning of May of last year, that was some rough times. Hopefully we don't go through another one of those but we should be prepared. In the case of bearish behavior of the markets i generally stick long on otcbb's and short on most amex,nyse, and nasdaq stocks i trade. Too early to see where the markets going after one day of a sell off, but im bringing out my short filter again ;), so lets see what the rest of the week has in store for us.
happy trading :)
-fous
now 3.1% up now in Shanghai. I think it's stupid to watch Financial channel for more than 4 hours today as I never watched a minute before yesterday.
Yesterday Jims Cramer (thestreet.com) bouht CAT on market open and added more upon dip. This builds up some confidence for me.
Right now, another Chinese analyst confirmed the big sellof is ridiculous. Technical correction he called it. More stocks are surging right now.
And again, China markets are extremely bull with average price of 40 times earning. I think it's very stupid to link US market to China market. Totally different economy structure and stock market mechanism.
chine's market is up 3.85% at the moment ....
I hope it closes positive today , this will help us markets after the big sell off ::)
Nice we may rebound :).
market finally closed, another hard day (watching TV til now)
Shanghai composite 2,732.88 - 2,888.90 2,881.07 +109.28 +3.94%
Shenzhen composite 7,596.02 - 8,097.33 8,039.70 +248.88 +3.19%
If globalization or domino effect still works today just as yesterday, how about a strong rebound? ;)
http://www.bloomberg.com/markets/stocks/futures.html
Futures are up DOW future up +95pts, NASD future +10pts S&P future +10pts
Email to my stockbroker:
Joe: So how's the view from under your desk. Hope they're sending you food down there. Whole thing wasn't so bad. It was sort of like a mass circumcision: everybody lost just a little bit (but how about that VSGN...little guy sure kept his pecker up and uncut....only stock on my board to be green)
I was on a plane from L.A. to London for 11 hours and got to our flat about 3PM (GMT). Market opens here at 2:30(GMT). I was too knackered to open my computer. Had a snack, took a nap and was awakened by daughter Regina in L.A. She told me the DOW had dipped 500 points and when I said WTF, she told me she had called because I might want to get on line and pick up some cheap stocks. That's my kid: all those years in the collectibles business with us has thought her that when calamity strikes, don't moan and groan. It's a time to start ripping off all those people with their heads in their hands. Do you know how much perfectly good wallboard went to waste during Katrina because nobody had the foresight to drive around with a pick-up truck? As my grandfather (a great stockpicker who had no idea when to sell) said: when life gives you lemons, buy Minute Maid. Regards, rudy
government confirmed there's no bubble in China stock market, and the economy development speed is very fine
and another major local evening newspaper comes out with headline: 2007: STLL BULL.
who knows? ;D
But anyway the reality is China market has been bullish for only one year...
Quote from: jorgegr on February 27, 2007, 11:50:33 PM
No Tokyopua, as far as I know this is just an index
can't trade it. Never seen "VOLUME" on any statistic.
There are $VIX futures, but to trade that one needs a futures account, or an Interactive Brokers account.
David is in the house! Cheers hopefully you feeling better today. Looks like we may rebound if the futures hold up :).
Sure the market will rebound, but the technical side is already been damaged and bears is already controlling the market. It may take months before bulls will take over again....
I don't think going long now is not a good idea, you never know what lies ahead. I guess the best move is, go cash, sit tight, and watch the market for now. ;)
Quote from: nullzero on February 28, 2007, 02:53:01 AM
David is in the house! Cheers hopefully you feeling better today. Looks like we may rebound if the futures hold up :).
Good morning nullzero :)
I was awake all night, reading and studying the situation. I'll write an article about it now.
Good discussion, guys.
Yesterday's selloff might have been an over-reaction to China, as most of the analysts and pundits seem to be billing it, but at the end of the day, my bottom line is: "What does the chart look like?"
This is a candlevolume chart of the SPY. The width of the candle expresses volume, so we can see that, not only were all of the gains since November 28 (3 months) given back, they were given back on huge volume.
Independent of the fundamental factors, that's some serious selling, and some technical damage to the chart, so we could be in for a bit more selling than the "few days to a week" of selling that I've been hearing on CNBC.
Short-term, what I would expect on any rally is what I personally experienced in my GIGM trade yesterday. It gapped down on me from 13.12 and fell to 11.21 in early trading.
YEEKS. :o
That certainly seemed like an over-reaction to me, but my opinion about that doesn't matter much when a huge part of my gain evaporated in minutes. I didn't expect GIGM to rally all the way back to the gap above 13.00, so I was real happy to get out it, and sell into strength at 12.69 on the late morning recovery.
A lot of stocks didn't have the kind of recovery that GIGM did yesterday, and if they do, I suspect that players will react the same way that I did, and sell into strength.
If this is more than than "just a blip" of a few days to a week that I've been hearing on CNBC. the 200DMA currently is at 134.40. A 50% retractement of the rally off the summer low is 134.38.
Below that is horizontal support, at 132.77-132.80.
If I had my druthers, I'd like to see a selloff to one of those levels. Corrections of the kind of gains that we've had are healthy.
These guys at IBD rock IMO, their article below contrasts the "everything will be OK, start buying now, Bernanke rally" type stuff I heard on CNBC most of the day. Their comment about what happened last time a correction came out of Asia is also sobering but something I hadnt yet thought of in that context (I bolded it below).
This Big Picture column alone (which I read nightly) has been worth my subscription price:
-----------------------------
Stocks Rebound Lethargically After Tuesday's Rout
BY JONAH KERI
INVESTOR'S BUSINESS DAILY
Posted 2/28/2007
Stocks tried to rally Wednesday, but modest price gains, lighter volume and so-so action by leaders failed to offset Tuesday's sell-off.
The Nasdaq rose 0.3%. The S&P 500 gained 0.6%. The small-cap S&P 600 inched up less than 0.1%.
While better than another day of heavy selling, the session fell far short of a convincing rebound after Tuesday's huge losses. The Nasdaq plunged 3.9%, leading a broad decline that scuttled the rally dating back to Aug. 15.
The Market Pulse reflects the new correction. The distribution day count, tracked during market rallies, dropped off the Pulse. Distribution days aren't relevant during corrections. You're looking for the market to find a bottom, then stage a follow-through.
Portfolio management is the name of the game under these adverse conditions. If you froze up during Tuesday's debacle and didn't raise cash, today was a good day to take money off the table. Don't compound an initial mistake by getting stubborn and trying to hold a vast portfolio of stocks through a correction.
Following a smart investment plan should get you off margin and prompt you to sell weaker stocks, rather than trying to fight the market's choppy waters.
The last time we saw problems out of Asia in 1997, the market fell into a three-month correction. With both history and current conditions working against you, it's best to step aside.
Ideally you'll come out of the market's correction with your portfolio and psyche intact. If you try to fight it, you could get your confidence crushed. The upshot? When the market turns, as it always does, you could freeze and miss out on the next big round of gains.
Using a sound set of trading rules makes all the difference. To a certain extent, you don't have to worry much about the broad market. If you're cutting losses quickly and taking profit where appropriate, you'll naturally move to cash and reduce your exposure.
If you want to try to ride your bigger winners through a correction, so be it. Just make sure you make a stand with your top dogs, not your laggards. Whatever you decide to hold, stay alert for sell signals.
Some leaders have held up. Futures exchange operator IntercontinentalExchange (ICE) regained half its loss in higher volume Wednesday.
But that kind of action was rare. A number of stocks that ran up for months have suffered heavy selling. Overwhelming downside volume has dragged many of these stocks below key support levels.
Panamanian airline Copa Holdings (CPA) broke out of a bullish base Aug. 16, one day after the Nasdaq followed through. The stock enjoyed one of the smoothest run-ups of any growth stock, nearly tripling over the next six months.
But heavy downside volume and a plummeting Accumulation/Distribution Rating have tagged Copa as a possible sell candidate, even though it's found support at its 50-day moving average.
The IBD 100 echoed the broad market's action, reclaiming just a small chunk of its Tuesday losses. The index rose 1.3% Wednesday, after diving 5.8% Tuesday.
Related Resources:
Review the basics of market analysis according to the CAN SLIM™ Investment Research Tool.
Learn from market-related Q & A's in the Ask Bill O'Neil Archives.
Read After The Close for critical announcements that affect both business and the economy.
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Quote from: Melf Elf on February 28, 2007, 06:34:07 AM
Good discussion, guys.
Yesterday's selloff might have been an over-reaction to China, as most of the analysts and pundits seem to be billing it, but at the end of the day, my bottom line is: "What does the chart look like?"
This is a candlevolume chart of the SPY. The width of the candle expresses volume, so we can see that, not only were all of the gains since November 28 (3 months) given back, they were given back on huge volume.
Independent of the fundamental factors, that's some serious selling, and some technical damage to the chart, so we could be in for a bit more selling than the "few days to a week" of selling that I've been hearing on CNBC.
Short-term, what I would expect on any rally is what I personally experienced in my GIGM trade yesterday. It gapped down on me from 13.12 and fell to 11.21 in early trading.
YEEKS. :o
That certainly seemed like an over-reaction to me, but my opinion about that doesn't matter much when a huge part of my gain evaporated in minutes. I didn't expect GIGM to rally all the way back to the gap above 13.00, so I was real happy to get out it, and sell into strength at 12.69 on the late morning recovery.
A lot of stocks didn't have the kind of recovery that GIGM did yesterday, and if they do, I suspect that players will react the same way that I did, and sell into strength.
If this is more than than "just a blip" of a few days to a week that I've been hearing on CNBC. the 200DMA currently is at 134.40. A 50% retractement of the rally off the summer low is 134.38.
Below that is horizontal support, at 132.77-132.80.
If I had my druthers, I'd like to see a selloff to one of those levels. Corrections of the kind of gains that we've had are healthy.
Excellent post Melf. That candlestick volume chart tells the story more eloquently than any of us can :o I hadnt thought there was much use to using candlestick volume charts until I saw your chart.
If anyone is still questioning the significance of yesterday and feels complacent after the calm today, take a good look at the chart Melf posted and that HUGE candle. If we had seen a candle like that to the upside we would all be talking about how much farther the market can go higher, clearly the converse has to apply.
Crazy day for my second day as a bear! Woke up with green all over my screen, closed the day slightly net down as I put on a few more shorts at the wrong time intraday, i.e. when the market was way down already. That is of course like buying long when you have a gap up, but I didnt think about it that way until the market moved to fill its gap.
So timing was bad, but IBD still says market is in a correction, and again until a strong 2% up on heavy volume day happens, the correction is still the name of the game. Corrections last at least a month in recent years, and the May correction last year lasted over 2 months. If you are still long, IBD says to sell into strength, go to cash, and build your watch list. If they are right, then its not too late.
Nikkei down 1.12% as I write, though China is up. Europe will be the true test, but if we open down tomorrow there wont likely be good data like the ISM number today to spark a rally. However, a strong session in Europe should allow an up open in the US which I think would give a decent up day to close out the week. We will soon see....
I have to admit that I will have to be on my own with my trading. The entire focus has switched to a bear market and given I have a self-directed IRA, I cannot short a thing. I took a pounding today but that's because I bought intra day and not in the beginning like I should have.
I intend to still try and use the stock screener to purchase stocks for long positions but I am sure that will be tough given the current climate. Now with most of my gains eroded for the year, I am at square one. Sucks as I wasn't prepared to be on my own yet. Guess I have to sit on cash and start being more of watcher right now and become a quick learner of fundies and tech stuff.
Hi Lance -
Are you sure you can't buy the ETFs that are in effect, shorts?
I cannot short in my account as I cannot get a margin account. ETF's, yes. but looks like they are doing no better than anything else out there.
Quote from: lancefur on March 02, 2007, 03:50:51 PM
I cannot short in my account as I cannot get a margin account. ETF's, yes. but looks like they are doing no better than anything else out there.
I guess I was looking around and maybe a tad misinformed. I was looking at AMEX and their ETF funds. Some did quite well today, nothing on fire but SRS, SMN and SKK all did above 3%. But if I understand these ETF's, they are just like shorting stock but without a margin account?
QuoteBut if I understand these ETF's, they are just like shorting stock but without a margin account?
Yes, that is correct...making them a good tool for bear markets, without having to go short individual stocks.
But hold on a second, ETFs in general do not all short stocks. In fact, I'm sure a most of them have long postitions within them. ETF stands for exchange traded fund...meaning it is like a mutual fund, but one can trade it like a stock. They are comprised of many stocks, and different ETS hold different stocks/sectors within them. Like SDS, which David owns now, it tracks the S&P500, but inversely. When the S&P goes down, SDS goes up. Another one is QID, which tracks the QQQQ, albeit inversely.
LANCE:
ETF's work like ordinary stocks except that:
1) Are composed of many different stocks and/or indexes
2) Others are inverse and even double results.
For instance QID shorts and doubles the NASDAQ
SDS shorts and doubles the S & P
DXD shorts and doubles the DOW
You can read about them at
http://finance.yahoo.com/etf/education/01
You can find 289 different ones to pick at
http://finance.yahoo.com/etf/browser/mkt?c=0&k=5&f=0&cs=1&ce=20&o=d
David has suggested and has in the portfolio SDS
If you read today's threads in "the market is open" you
will also find specific suggestions for SDD and TWN
All of these are ultra shorts that double inverse, in other words
if the Nasdaq goes down: QID will double up but if the Nasdaq
goes up, this ETF will double down.
Good luck
David what do you think of the FXY etf?
To play with the trend up yen due to the yen carry trade.