… shopping that is. Today we’ll see some very low volume action, so just extend your vacation. Too many people trade, just to trade. You need to quit that. Wait for high probability setups. Only trade low volume days if you want to take advantage of exiting or adding to swing positions on a move against your play.
The price actions in the double inverse ETFs are very startling. Especially FXP, which is near a 52-low, despite having both the U.S. and the Hanseng trading on a very bearish multi-year chart pattern.
… what are investors thinking about our global markets, especially that of China? Are they betting on China reaching record growth again? Or is the FXP ETF just badly priced?
Gio
What are your thoughts on the markets next week? Does the selling come back and take profits. Are you a believer in a December rally?
Im short LM, thoughts on it?
Thanks in advance….Ass napkin Mike
Gio…look at FXI, it is breaking out after a long downtrend. May be a good “tell” for FXP…no?
Badly priced……
FXP = Anomaly
Things are deteriorating at a rapid pace in China.
I bought FXP at the close on Wednesday for $49.55.
Gio…you been looking at any of the direxion 3x ETF’s? TZA, BGZ etc?
Re: FXP. This is the problem with all these double and triple ETF’s. Volatility screws them, as they’re forced to constantly sell into a declining market to maintain their desired 2 X’s capital short position, and constantly buy into rising markets so as not to get overly short. In an extreme hypothetical, lets say FXP starts with a share price of $50 and short sells 1 share of he index @ $100. Overnight China gets bombed and the index trades to a value of $10. FXP is now up 180% and has a share price of $140. HOWEVER, to maintain its desired 2 X’s short position FXP now needs to be short $280 worth of stocks (140X2), so at the end of the day they need to short sell another 27 shares of the index @ 10. The next day, there’s a relief rally and the index trades up 50% to 15, effectively wiping out FXP. So despite Chinese indices being off 85% in 2 days, FXP is wiped out. Both FXI and FXP are down substantially for the year.
Junktrader, no doubt, leverage means that these diETFs have an eventual date with ZERO. That is probably years away.
However, they use swaps to maintain the relationship with the underlying ETF they track, so your example is not necessarily accurate.
Lopsang… i’ve traded the 3x Energy Bull ERX. My eperience and observation of them is that they are very illiquid. They are not really good ETFs to play right now.
As for the inverse 2x ETFs, they are becoming a nice contrarian indicator. However, there is no magic range there, but so far I’m calculating the slopes and “speed” of these stocks to measure market sentiment. I think they’re badly priced.
FXI is whack. Short FXP instead for a bullish China play.
A good indicator on China is that they will be an net exporter of crude this month….Net exporter! They must be fudging their growth numbers. I would wait until SP 500 in the 600-650 range in January 2009 to go long China.
Hello Gio,
Of all the ETFs IMO FXP is the flakiest.
TGT will retest $31, before it test 50 day = $39–that’s all I got.
In fact, I don’t even think TGT can reach it’s 50 day, but logic says it has to. So I guess there will be a small DEC rally, though probably will look erratic.
Sold NOV.Good swing trade.