The Dow is down 50 and FAZ (3 X financials bear) is down 5% on the day. Financials should drop like a rock tomorrow.
The Dow is down 50 and FAZ (3 X financials bear) is down 5% on the day. Financials should drop like a rock tomorrow.
-- Tom | My Trades
Looks like the market is not liking the new plans for Citi.
So the S&P closed at 735, an important Fibonacci level. (Next Fib level is 665, by the way.) So I think there are going to be some buyers come Monday morning who will expect a bounce off that 735 Fib level.
Now the reason I care is that I'm in TZA (the small cap levered bear) at the moment. I am expecting the rise in the S&P to pull the small caps market up with it. And it's probably going to hit my TZA stop and knock me out of that ETF just before the bounce ends.
I'm trying to decide whether to move my stop and hope that Scottrade gets to it before my current stop triggers at market open, or whether to buy some TNA (the small cap levered bull) to hedge my way through the expected bounce.
I know how to pick markets, but entry/exits and stops are keeping my tuition payments to ETF Unniversity humming right along!Thoughts, anyone??
Lady
If you think education is expensive, try ignorance. - Derek Bok
Lowering the stop, or selling at the open, may save you a little commission rather than buying the short ETF.
Based on volume, I do believe that we will see some sort of relief rally Monday or Tuesday, but am not expecting it to last (which could mean the bottom is in). If you don't mind a little pain, you might just hang on. This market requires wide stops, assuming you believe in your position.
If I were to pick a stop for TZA unfortunately I would have to say 66 or lower, which may be a little too much risk for you, and can easily be hit with a good rally this week.
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-- Tom | My Trades
Thanks for the quick reply and thoughtful opinion.
My current stop is set at about $71 and I'll bet it gets hit Monday morning because it's leveraged 3 to 1 with the small caps. And that's about as much pain as I'm willing to take on this ETF. Maybe I'll think about selling TZA, taking my small profit, and buying back in at the lower level. Because I still think that is a great ETF to be in for the intermediate term.
Lady
Last edited by XL-entLady; 02-28-2009 at 06:32 PM. Reason: correction
If you think education is expensive, try ignorance. - Derek Bok
Mike Burk's 2/28 email weekend edition concludes with this statement:
"The market is extremely oversold and followed the average seasonal pattern for February during the 1st year of the Presidential cycle very closely. Seasonally, next week has been, on average, strong. A bounce over the next week or so would fit the seasonal pattern and relieve the oversold condition. After that the seasonal pattern and the high level of new lows make new index lows likely. I expect the major indices to be higher on Friday March 6 than they were on Friday February 27."
FWIW,
Lady
If you think education is expensive, try ignorance. - Derek Bok
I am actually expecting a wild week, with an explosive rally in there somewhere. I'd like to be out of FAZ when it happens but I'm still selling rallies.
I'll probably take profits on at least half, maybe all, of the FAZ position if we gap down Monday.
-- Tom | My Trades