Thursday, November 01, 2007

Downward Facing Dow

No time for chatter, but I piled right back in on my index shorts in the pre-market and at the open. Unfortunately I missed on the Financials double-short SKF (damn!), but as the broad market quickly blew through yesterday's lows I put on more short than what I had coming into yesterday's Fed cut. Internals so far are clearly negative and breadth is very negative (>6-1 negative on NYSE and >5-1 neg on Nasdaq.), but the NDX is not leading on the way down; as a result, I'm focused more elsewhere at the moment (keying w double-short Russell 2000, TWM today). Oh, I covered the opposite-Cramer play GLW at 23.85 ave. in the opening minutes.


Bozo said...


I'm booking some profits in oil and oil services and going short, way short, having been through this time, and time again. Crude spikes to higher highs, as do oil service stocks, then they tank. Takes a few months, then the cycle begins anew. Perfect for a swing trader with a bit of patience.

Since I trade in a SEP-IRA, I can't short "per se", but I have found the short and ultra short ETFs a good way around this. I go long in USO and XES (or OIH if I have the balls), then sell and buy DUG.

I am so looking forward to buying the ProShares China UltraShort ETF when it becomes available. Gonna hold that until after the Olympics, when the Chinese market will tank big-time. You know it's a bubble.



quark said...

I'm in the same thoughts as all of this, cept I'll be short China long before the olympic torch lights up.

And yes, smart Ultrashort trades are a great tool for IRAs and long-only accounts. My 12 year old's college UTMA account has been long TWM since the end of May. At first it was a hedge against longs. For the moment though, he's short-only in a long-only account; thanks to Ultrashort TWM. I pray they don't change the rules at some point. How can we retire if we can't play the market to go down once every thousand years or so ;)

Bozo said...

I tend to trade benchmarks in sectors I have traded for a period of time, such as energy. Having watched energy slip and slide (no pun intended) over a period of years, I giggle when I hear all the noise about "crude to 100 and more" and "oil services to the moon". Having been underwater long oil and oil services, luckily then going green (way green), you have to cash out at some point. I set +30% to cash out and go short.

The point in oil stocks and ETFs is to get out when the getting out is good (i.e., when the sector is rising but near the tipping point). If you wait until the stocks tip, you sell into a falling knife.

I so remember not so long ago when oil service stocks, you couldn't give them away as Christmas gifts. It will happen again. Exxon misses, it's the canary in the coal mine. Less money, less profits, less to spend on oil services, been there, done that.

Ergo, bought another 50 shares of DUG this morning.