The inverse ETFs trades- SKF, FXP, SRS. A conservative approach to trading, if there’s such a thing as conservative.

Wow, that was a long title.

As I’ve stated a few weeks ago, I think the Dow’s relief rally will take us above 10,000 in the short term.  On the rough ride up I will be shorting the inverse ETFs for a swing trade, while getting long them on a day trade as a hedge in the case that the market decides to drop. 

[[fxp]]   …hit my “under 100” target.  Will re-short closer to 100.

[[skf]]   …short on weakness

[[srs]] … don’t swing short.  This one has the smallest “premium”.  Rather, get long for a day trade hedge.

And I’ll ask the question you were going to ask me, “why don’t you just get long UYG instead of shorting SKF, or get long FXI instead of shorting FXP?”

Answer:  They don’t truly follow each other in a perfect inverse fashion.  I trade off of ETF imbalance, and right now, the inverse ETFs are at a bigger imbalance or “premium.”  Case in point, the Dow is up +400, but:

[[fxi]] is not as good as shorting [[fxp]] .  And [[uyg]] is not as good as shorting [[skf]] .  See, there’s an imbalance and the general acceptance is that SKF and FXP have higher premiums.  One day these inverse ETFs will become good contrarian indicators such that as the put-call-ratio.

…for these reasons, I also outlined another strategy to play this relief rally, which was to short FXP at 80% as your primary trade and short FXI at 20% as a hedge. 

Aloha!
Gio

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