Ultrashort ETFs: Now It's Less Embarrassing to Admit Owning Them

Why do I continue to hold the majority of my ultra short ETFs? Because they are no longer acting like basket cases. In fact, most of them are forming beautiful looking bottoms and the charty geek in me cannot resist bottoms like this, especially when they are doing a good job of protecting my bullish positions in some of the smaller gold stocks.

Here is SRS, the ultra short real estate ETF acting nicely inverse to the IYR chart shown yesterday and trying to confirm a breakout.

Comments

[DaveW:]

Gary, hilarious title, probably because I can relate... But, once you get the hang of them, they are wonderful. One must wait for a full, rally momentum shift before attempting to hold for more than a few days. The Force Index is a nice indicator to use for added confirmation.
Disclosure: a no-longer anonymous holder of SRS and TZA.

Jul 10 06:32 PM

[Gary Gallo:]

Love SRS myself. Recommended it here. Own SRS with a stop below the 50 day moving average at $20.75.

Jul 10 06:53 PM

[Dirtt:]

Couldn't you keep this secret and let the cat out of the bag at higher prices?

Next week should be fun. I'm expecting "them" to try and pump some more life into the indexes. And unlike the mystery behind the location of the TARP money (UBS...shhhhhh!) empty malls and commercial space is getting harder and harder to hide. Especially when advertising the availability of the space is how it gets filled.

Looking at some of the weekly charts you almost have to refrain from drooling on the keyboard. Keeping the coffee away is hard enough. But remember to expect the unexpected. I'm just hoping the unexpected right now is that "they" won't let the bulls out or the bears in.

I'm constantly seeking reasons why I'm wrong on a trade but with hard to hide results the FED may want to switch from unattainable cheap money to injecting opium into the nations water supply.

That could throw some cold water on the bear plight. Good hunting out there.

P.S. When the "short seller" was being vilified in the media for bringing down the banks (and not the bankers/pols who really brought down the banks) I was wearing my ultra-shorts like they were badges. The problem was that by the time I could explain what an ultra-short was they were too many beers in to care anymore. God help us.

Jul 10 10:15 PM

[donzelion:]

Didn't know it was embarrassing to admit owning them - just embarrassing to admit thinking they would actually track the opposite moves of the market over the long-term (quite a few advisors seem to have messed this up). I bought a fair chunk of SKF at an average of $47. I'm not partial toward the fees and don't expect it to surge like it did in October/March, but I like that it correlates with just about nothing in my portfolio, and if the market turns south quickly, it should offer a modicum of insurance (95% of my portfolio at this point is long, and heavily focused on dividend equities or bonds).

I think of them as the equivalent to a short-term insurance policy on a rental car - you hope it's just an unncessary waste of money, but under the right circumstances...and today's world is full of unpredictable circumstances.

Jul 11 12:27 PM

[predictorma...:]

SRS is not a good thing to own because CRE stocks and IYR are obviously manipulated. SRS can fall 10% in 10 minutes (generally in the late afternoon). What kinda of "thing" (for want of a better term) does that?

It sucks to own it unless there's a major trend. In this case the trend would have to be declining CRE. Instead you get CRE in a range (why I don't know) and SRS suffers accordingly (plus you add in decay).

I lost serious money in SRS in the period January to March (I got some back at the end). You are a 2X tool of the market manipulators owning it.

Jul 11 12:49 PM

[darrenlobo:]

One might say that an Ultrashort one should be proud to own is DTO. I mean, we all want the price of oil to go down, right? :-)

Seriously though, it seems like a sensible buy these days.

Jul 11 04:40 PM

[capital pains:]

Bought more SRS today as it plunged. With SRS you can't even take a ten minute coffee break lest you come back minus 10-15%, an expensive cup of coffee indeed !
We all know that CRE is a major diaster. The latest salt in the wounds for mall owners is the huge jump in tenants enforcing their cotenancy clauses forcing mall owners to renegotiate down.
Anyone who has visited any malls in the past 6 months can plainly see the consuming emptiness
Cotenancy clauses will also permit tenants to renegotiate not only if an anchor or major tenant leaves, but if mall traffic falls below the level specified in the cotenancy clause.
Starbucks for example has been on a rampage in every mall they occupy. Looking to enforce every cotenancy clause they can. They have reaped millions of dollars for the company simply with this device.
All this being said, will the market stay irrational longer than we can stay solvent ? SRS would seem to be seriously underpriced. Yet, it's never that easy, is it ?

Jul 13 04:46 PM

[predictorma...:]

So Friday when this article was written SRS closed down $1 from the day's high (5%) and lost 50 cents in 5 minutes late in the day.

On Monday it closed down $2 from the high, and again lost 50 cents in 5 minutes.

Today it is down 2% from the open, and we're not even at 2 PM.

So if you read this article Friday morning and got in at 22+ you're down 7% and Tuesday's not over yet.

Jul 14 01:59 PM

[predictorma...:]

Anyone feeling good today (Wednesday)?

SRS getting crushed.

Jul 15 03:25 PM