Big-P

Investors Turn to UltraShort Funds to Beat the Bear

Don't forget the supply/demand factor in the trading of these ETF's. I know you guys recall the panic in the SKF when they floated that bogus rumor that the new short-selling rules regarding the financials would put that ETF out of business. As soon as all of the scared money drove that index down, it turned around and made up all of the losses and then some as people realized it wasn't going to go away after all.

My money says we're better off exploiting these anomolies than complaining about them. I'm long the DUG precisely because it's been crushed off its recent high even though crude is imploding and the energy stocks are unimpressive. Betcha that DUG makes a new high in the blink of an eye once these guys figure out oil's going to 36 on this leg down. BTW, don't bottom-fish stocks tomorrow because I'm going to CRUSH the FUTS market tomorrow and Monday.
wallstreetprick.com


On Dec 04 02:24 PM Kunst wrote:

> From a trading point of view, these ETFs don't work at all as advertised.
> Pull up a chart of any of the pairs for various time periods and
> you will see the problem. ProShares says they only match the daily
> swings, and longer-term results may vary. Actually, they don't even
> match the dailies well, and the longer-term results are WAY out of
> line.
>
> Examples (as of 12/3/08):
> • Energy: YTD, XLE, the basic index, is down 41%. DIG is down 75%,
> DUG is down 7%. Both ETFs are down for one month, 3 months, and
> one year (for 6 months, DUG is +10% while XLE is -45%). How can
> you make money on these?
> • Financials: YTD, UYG -85%, SKF +30%, in a year when financials
> have gotten killed (XLE = -57% YTD).
> • China: YTD, FXP -38%. How can FXP be down in a year when the Chinese
> stock market has melted (FXI -52%)?
>
> The major US indexes are somewhat better:
> • YTD, the S&P 500 is down about 41%. SSO is down about 70%.
> SDS is up about 73%. That's not too bad, but the ETFs should be
> around 80. At least they match well.
> • YTD, the DJI is down 34%. DDM is down 64, DXD is up 48. Considerable
> slippage on DXD.
> For 3 months, it's DJI -23, DDM -50, DXD +19. DXD is not only not
> double DJI, it's not even one time. In fact, it's the same as DOG
> (single-inverse) YTD.
> • YTD, the Nasdaq is down 34. QLD is down 64. QID is up 68. Decent.
>
> • YTD, the Russell 2000 is down 40, UWM is down 72, TWM is up 63.
>
>
> I have used these ETFs extensively this year, some for months at
> a time. I feel ripped off now that I see what the long-term results
> are. They simply don't do what they say they do. You might as well
> play the lottery.
>
> I will no longer use the sector and international ETFs, and will
> use the US indexes sparingly. This is unfortunate, because in a
> down market, the ultrashorts are the best way to go, if they do what
> they are supposed to.
>
> Buyer beware!