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Inverse ETF Analysis

|Includes:ProShares UltraShort Dow30 ETF (DXD), SDS
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DXD -- Inverse of Dow Industrials Times Two

(We are now LONG 300 shares of this at 14.69 as of 1-10-12)

1-22 We have no problem come Monday taking some more of this issue for a trade up here. We'll keep our current position for more of being an investor and that denotes longer term.

1-22 See the blue 3? If this is going to stage a 4th wave higher (to 50 day perhaps?) then it could run to say 15 or 15.50 ish. From 14 that's a point to a point and a half. That means we have to take enough size to make it worth our while. Same goes for SDS

SDS - This is the INVERSE of the S&P 500 Index TIMES TWO .

(We are now LONG 300 shares of this at 18.25 as of 1-10-12)

1-22 We have no problem come Monday taking some more of this issue for a trade up here. Heck a move in the index to the green uptrend line shown in its daily chart is good for a decent trade and all for the cause. We'll keep our current position for more of being an investor and that denotes longer term.

WHAT IF

1-10 (Updated risk numbers) So WHAT IF the S&P 500 goes to 1320 and lets also say we are long SDS (Inverse Of S&P Times 2) what would the impact to that position be?

Well first off its a 2.3% move higher therefore the SDS position would go down twice that or 4.6% lower from here.

Now let's say the position makes up 6% of your overall portfolio. Now what would the impact be?

Well using a 100,000 portfolio as an example a 6% position is $6000, a 10% position is $10,000. Being down 4.6% on a 6% position is $276.00 on its own.

Impact to the whole portfolio at that point is? 3/10th of one lousy percent! Surely you can handle that kind of risk right?

On a 10% $10,000 position being down 4.6% is $460.00 Impact to the whole portfolio at that point is? 4/10ths of one percent!

Stocks: DXD, SDS