What a piece of shit. Did you see SRS go from +8 to +2 in the last 10 minutes of trade? Seriously, the end of the day spastic rallies need to stop, else I am going to inflict bodily harm on random people.
Just when it looked like a solid down day, BAM, the asshole dip buyers step in and queer up the tape.
The late day fuckery in SRS, SMN, and other idiot 200% etf’s, is why I will discard them shortly and never trade them again. EVER. They represent everything that is stupid about Wall Street: bad product with cheap leverage.
FUCK YOU PROSHARES. May Santa Claus bomb your homes with napalm laced egg nog.
At any rate, despite the late day rally, I still think we grind lower.
My top picks are short KIM, short VNO, short XOM, short RIG and short LFC.
Do yourself a favor and avoid the thin tape amateur action: go to cash.
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SRS is a fucking hor. it sucks barney frank cock!
“FUCK YOU PROSHARES. May Santa Claus bomb your homes with napalm egg nog”
Just what I was thinking Fly, but you said it better. Good call sir.
I HATE SRS
You can’t quit me!
Not that I give the IMF a lot of credit, but they sure the heck have been a lot more right about this fuckery than all the PermaIdiots in this country who defended the “buy now, pay later” economic model. Fucking Idiots!
Here’s what the Chief of the IMF is now saying:
The head of the International Monetary Fund (IMF) warned on Sunday that the economic situation could get even worse in 2009 if governments fail to take firm enough action
Oh … no shit Sherlock. It’s gonna get worse, and NO the gawd damned market ain’t priced this shit in yet.
Back to the shit hole we go.
8)
you think the sick “last minute rally” is amateur action?
it is more like a market manipulation for me…
Observe how the 2x/3x thingies strive to undo the effects of the stolen time machine.
Reality conservation is wonderful to behold! Although some opinions may differ.
Another WTF day
Asshole dip buyers pee sitting down!
Just locals being locals. Thievery at its best.
Ass Lickers…
Welcome to the End Of Day Dark Pool Program Trading brought you by GS ,Plunge Protection Team and Friends…Should have figure out long time ago…
Yeah, i’m staying away from swinging the Proshares or any other inverseETF unless the Vix picks up. Vix magnifies these iETF prices, otherwise, they are deteriorating assets.
tape is light, and dominated by dumb money… both sides.
Nasty SRS. My fingers and reaction time are too slow to ever trade it.
Off to the Orlando Magic game where it’s $1 hot dog, popcorn, and soda night. My son and I plan on eating until we puke.
EFT is WHORE! Take a loss on SRS…
Ultra Proshares is the equivalent of crack cocaine laced with meth, taken intravenously, weekdays between the hours of 9:30 am and 4:00 pm. ET.
Direxion is the equivalent of drinking liquid red hot magma from a shot glass.
XXX’s are great day trading vehicles. Just never hold overnight or first or last 30 minutes of day.
Dennis Gartman pees sitting down
Look at the action on 23 strike puts for IYR. The open interest is 30K contracts !!!
Thats were the pros at betting IYR may end up. Go figure what that will do to SRS.
This thing used to go up 70 points in one day and no one was complaining. Now it drops 5 and everyone is bitching and kicking …
Don`t forget the fundamental picture. Sooner or later we have to trade in line with fundamentals.
Peace
SRS may be a sucker play if they get a piece of that bailout pie. It’s just like betting on GM or FNM.
From the WSJ:
‘ With a record amount of commercial real-estate debt coming due, some of the country’s biggest property developers have become the latest to go hat-in-hand to the government for assistance.
They’re warning policymakers that thousands of office complexes, hotels, shopping centers and other commercial buildings are headed into defaults, foreclosures and bankruptcies. The reason: according to research firm Foresight Analytics LCC, $530 billion of commercial mortgages will be coming due for refinancing in the next three years — with about $160 billion maturing in the next year. Credit, meanwhile, is practically nonexistent and cash flows from commercial property are siphoning off.’
Dude how many weeks now have you been saying your done with these 2x etf’s?
You also said you wouldnt be doing anyhing this week.
Mr Fly. Please take your own advice and stay away until Jan first.
I think most of your user base is staying away. You will conquer next year. Is it that important to conquer the next few trading days?
Buy USO at 27 Tuesday….no brainer. should close at 32
The Fly does not take advice from the internets. He marches to his own drum beat.
It should be no revelation that he is addicted to the markets, trading, and all things pertaining to banking coin.
By his own admission, he is a driven individual—driven to do more and get more, laughing at adversity, while kicking the competition (and senile, weak old men) down long flights of stairs.
3:30 pm and SRS/IYR. PLEASE READ.
almost all trading sessions something strange happens to IYR. It almost always starts going up (same cases for UYG at times).
I have charts saved for the last 2 months and sometime between 3:15 and 3:35 heavy buy-side accumulation of IYR occurrs.
This rather odd. Also the volume at around 3:30 starts to heavily increase.
This must be a computerized system at a major hedge fund or gov’t related enterprise injection tens if not hundreds of millions into IYR (SPG, VNO, GGP, CRE) around this time.
please mark this note for observation. Heavy accumulation of IYR all the way into the close regardless if it’s a green or red day. Somebody is buying REITS to stabilize the market artificially.
=====
I strongly agree with you, someone or something is buying up the marke/reits at this time. I strongly believe its government intervention.
=====
That is part of it, but that isn’t entirely true. IYR isn’t down as much as it’s components suggest it should be. I just think this is a simple case of an ETF trading at a premium. Should come back to NAV soon enough.
=====
there is usually a major pop in IYR volume and percent gain around 3:30ish on most trading days since the meltdown in october-nov.
look at past charts of IYR and notice the pops in price around 3:30-4pm which bring down the price of SRS…
=====
i agree. it almost has to be. i looked at volume of charts for last 2 months and suddenly little past 3 pm the IYR volume magically jumps and SPG, VNO, boston prop, etc start going north.
lets watch this trend the next few weeks and see if it continues. it’s very obvious to me that there is manipulation with the REITS going into the close. Very strange in my opinion.
—–
I agree. I’m not movin from SRS. This whole thing is comin down. It’s odd that it’s bad news after bad news and the Markets are holding. We are headed for a Depression and there is NO WAY to stop it. Market will correct. Charts are showing a roll over on the indexes.
—–
sir the reits are struggling in wave 4 bear flags like all other things in market.
BTW smart shorts cover till THINGS BREAK DOWN
no big deal those CHARTS on the reits and the bullish reit indexes are very close to falling. IT’S THE BIG DOGS distribution and FLIPPING holding them up till they are done with what they need to do. NOTHING MATERIAL OR SHOCKING about this.
btw TODAYS LOW spx minus 2 pts IS THE major MONTHLY SUPPORT FOR THE INDEX. since it is a 3rd level test which happened 2 times already this month. outside of the low volume trading expected rest of this month JUST KNOW THE MARKET has gone VERY VERY WEAK.
sure they can lift things on low volume same as take things down.
I SUSPECT there will be a MAJOR MARKET SELL OFF any day now REGARDLESS OF VOLUME
just what many charts are calling for
—–
This manipulation has been going on across the board since September guys—-nothing new. The Quant funds are using programs to manipulate both the ultra ETFs and underlying components for manipulated gains. Its pure fraud and the SEC could care less. But the large volume end of day continues in its 4th month.
Easy to load up on the 2xs ETFs than drive volume into the largest components.
nothing new….
Probably should stick to these 3: DXD, QID, & SDS
Thank you for your support:
http://biz.yahoo.com/bw/081222/20081222005889.html?.v=1
Will ex -dividend prices be bid down on these etfs tomorrow?
ProShares ETFs Declare Distributions
Monday December 22, 5:05 pm ET
BETHESDA, Md.–(BUSINESS WIRE)–ProFunds Group, the world’s largest manager of short and leveraged funds,1 has announced fourth quarter income dividend distribution declarations for its ProShares ETFs. The firm expects dividend distributions for 52 of its 76 ETFs.
http://biz.yahoo.com/bw/081222/20081222005889.html?.v=1
All of you who are talking about quitting trading the diETFs are a bunch of pansies. These things are pure gold money. They are like money trees.
Fly, you should have sold SMN and shorted it, right when I told you to.
Strange thing is what do folks intend to replace the diETFs with? Shorting individual equities? Yeah, no risk there…
Let these diETFs be a lesson in position sizing and risk management. You can come back to the money tree over and over and over as long as you use position sizing and risk management.
aaaaaaaaa ooooooooo aaaaaaaaa….aaaaaaaaooooooooooaaaaaaaa
dont blame the etfs wasnt them today
it was THE SPIRIT BULL….
the spirit bull will be comming for you my friend
aaaaaaaaa ooooooooo aaaaaaaa aaaaaaa oooooo aaaaaa
Pretty funny… that Richy Rich asshole who looks like Eric Bogasian’s runty son is now advertising on Fly’s blog.
Fly, you whooah.
___________
(Unless this whole Richy Rich thing is just a Danny concoction, drafting off some of the Fly’s original themes.)
___________
MUSTARD SEEDS WILL BE THE END OF THE 2X INVERSES LOL
i like the 2x inverses ..they can get my stupid ass out of trouble 2x faster than i got it in..but thats me.. playing with just those well you might not be able to get your ass out of trouble fast enough
Before the Worst – http://www.youtube.com/watch?v=ON30LOTsRks
Wood-
Go fuck yourself. Do you still blog here?
Go fuck yourself.
Ah, a fake Fly.
The fake Fly is still a pansy for being scared of the diETFs.
It’s nice to see The Fly mention the Najarians every so often in a good light — since optionmonster.com is a paid advertiser.
Why Short Sector ETFs Aren’t So Smart – Part 1
By RealMoney Guest Contributor
12/22/2008 12:23 PM EST
Click here for more stories by RealMoney Guest Contributor
Try Jim Cramer’s Action Alerts PLUS
CLICK HERE NOW
This article is by Eric Oberg, who worked in fixed income, currencies and commodities for Goldman Sachs for 17 years before retiring as a managing director.
What would you say if you bought an index fund, only to find out that it lagged the benchmark by 30%? 80%? Over 100%? I am sure you’d be dismayed, disappointed and disgruntled.
What if you had perfect foresight and decided at the beginning of this year to go short U.S. real estate and short financials? What if I told you about an easy way to implement these trades, and to implement them with two or three times leverage? You’d expect to clean up, right?
What if I told you that if you were spot-on with your market call, positioned half of your portfolio in each short, you would still be down 23.4% year to date?
That’s better than the overall market, sure, but still a little perplexing, I mean, how could you be down for the year with one of the most prescient market calls of all time?
Yet this is exactly what would have happened if you were long the double-levered short-biased ETFs on the U.S. real estate and financial sectors year to date. In fact, one would have been better off being short the double levered long funds vs. long the double levered short funds to implement this strategy.
Given that the double-levered long-side ProShares Ultra Real Estate ETF (URE – commentary – Cramer’s Take) was down nearly 80%, one would expect its complement (the ProShares UltraShort Real Estate ETF (SRS – commentary – Cramer’s Take)) to be up 80% instead of losing nearly half of its value, given they are based on the exact same index, right?
The same goes with the financial sector ETFs. Given that the double-levered, long-sided ProShares Ultra Financial ETF (UYG – commentary – Cramer’s Take) was down nearly 85%, you’d expect its complement (the ProShares UltraShort Financial (SKF – commentary – Cramer’s Take)) to be up 85% rather than flat. As the car rental commercial says, “Not exactly…”
How Short ETFs Can Work Against You
ETF
Jan 2, 2008 close
Dec 17, 2008 close
YTD Return
URE (2x long RE)
33.15
6.70
-79.8%
SRS (2x short RE)
110.42
57.19
-48.2%
DJ US RE index
605.69
368
-39.2%
UYG (2x long Fin)
39.22
6.09
-84.5%
SKF (2x short Fin)
104.00
105.47
+1.4%
DJ US Fin index
683.8
346.9
-49.3%
ETF Data Source: Yahoo! Finance
Index Data Source:& Barclays
What makes this even more bewildering is that ETFs, with their create/redeem process, should eliminate or curtail arbitrage, so there should not be any significant net asset value distortions, and that indeed does not
Why Short Sector ETFs Aren’t So Smart – Part 1
Page 2
To be fair, these funds do exactly what they set out to do — track the daily changes in these indices. But that is also their fatal flaw as any sort of long-term investment or portfolio hedge. It is the daily rebalancing of the portfolios in combination with the market volatility and the leverage that has eaten into the returns of what appeared to be a savvy bet. And the irony of it all is that these funds, due to their structure, actually contribute to the volatility, thus directly contribute to their own failure as instruments for anything other than a day trade.
The following is a little bit of an over-simplification, because there are elements of path dependency, the element of compounding slight NAV deviations that affect returns and a few other technicalities, but let me try to explain how on earth it is possible to be double short an index that is down 40%, yet still be worse off than if you were long that index.
I am sure most people are familiar with the concept that if you go down 20% one day, then up 20% the next, you are still worse off than when you started (100 times 0.80 equals 80, and 80 times 1.20 equals 96). This is similar to what happens with these double-levered short side ETFs (the two-times long-side ETFs look like they do what they should), you get shorter on the way down, making bounces hurt more, because you lose more of your capital account.
So when you’re frequently rebalancing, volatility nibbles away at your returns. When volatility goes to extreme levels, it eats away at your returns … and with leverage, it devours your returns. This is essentially a short volatility position, and the short volatility position can outweigh the short index position, as evidenced by the returns in the chart. So these ETFs are not quite as effective as one would think as a mainstay in the portfolio, as a hedge or otherwise; in fact, they may be completely ineffective, or even counterproductive, at achieving objectives.
What’s worse, though, is that by their very construct, these ETFs exacerbate the volatility. By bifurcating an index into long side and short side ETFs, they eliminate an “out” for the market maker, causing the market maker to actively hedge in the underliers. With a normal security, all buyers and all sellers come to a central meeting place, and buyers can be matched easily with sellers, and we reach price discovery. But when you set up a specifically one-sided instrument, rather than one common product that people can be either long or short, you contribute to dislocations.
USPS reports that there will be 1 billion less packages shipped this holiday season, it appears DHL made out ahead of the curve…
I’m going to now publicly denounce anyone who doesn’t understand the diETFs as a fucking moron.
Understanding and not liking, fine.
Understanding and liking, fine
But any element of whining about how they work / not understanding = you’re inept, in my book.
my GOD, it’s not difficult.
IMAGINARY NUMBERS EXAMPLE
China = 100
2x Short China = 100
China falls 75% = 25
2x Short China rallies 150% = 250
China rallies 20% = 30
2x short China falls 40% = 150
China rallies another 20% = 36
2x short China falls another 40% = 90
THERE. SO EASY.
NET NET, CHINA FELL FROM 100 to 36, a decline of 64%, but the 2x Short index LOST 10%, from 100 to 90.
THE MATH IS EASY.
Do I like how they work? No. I agree it is not intuitive. But shut up about it already.
I move that anyone who bitches about dETF’s again on this blog must submit to the Christmas Death Saw*.
_______________
*Magically Ghey David Copperfield Powers of Illoooooosian Optional.
Fly,
No matter how much Eric Bogosian’s son is paying you for that ad in the upper right, it’s not enough.
Not nearly enough.
___________
Danny, seems like we’ve been discussing this for the better part of 2008. Anymore, I just ignore it. But I think you’re frustration is justified.
Maybe there is an iBC dictionary entry somewhere in that lesson?
Jake, the sad thing is that this 2Rich4U guy has PAID GOOGLE TO ADVERTISE HIS .BLOGSPOT BLOG.
Yep, that’s right. He didn’t pay us. He paid Google.
Did I mention its a .blogspot…lol…not that there’s anything wrong with that. There are some great bloggers using blogspot. However…to PAY for advertisement…for a blog??? lol..
Jake, I agree, punishment should be severe.
Shed, all good suggestions, ones I shall heed.
He’s bragging on his blog about how he gets 200 visits per day. Seems like the entire blog is dedicated to hating iBC.
He claims to have a 5K/month advertising budget.
He could double the monthly traffic of iBC and still not make 5K/month from his blog.
I think it’s best to not encourage his rampant douchebaggery with response.
Danny, I am in 100% agreement, both about the copious douchebaggery and about not responding.
yeah, its kind of astonishing. Like even if his Dad is who he says, and even if his dad himself is the world’s largest schmuck, he’d still have to be embarrassed to read that shit coming from his son’s mouth.
New game: Pimp your frenemies!
_________
That prank seems more like fucking your enemies
Lol… funny u guys are talking about that ad spot. yeah, it kindah caught my attention, in a, who spit on my blog kind of way.
Danny, that was my take, too.
Jake, great find! That is some funny stuff!
sigh…that high school in the article is only miles away from me. fucking kids.
have to agree with danny and wood here. i love the etfs.
NEW LOWS by 1/12/09.
DON’T short China stocks i.e. LFC.
Danny/Wood/Gio… remember the old saying, don’t believe half of what you hear and 99 percent of what you read on the Internet.
My personal belief is that it’s some young trader who got called out in the PG and is trying to use Lolz and interwebs gamez for revenge, sadly the contest is all in his mind.
Whatever he mentions, divide it by a factor of 100 (or even 1000) to get the real number. Real traders don’t brag about their parent’s net worth (therefore it’s fictitious) and most wealthy people don’t sit around on the Internet talking about how much wealth they have. It’s a pretty good bet his whole shtick is made up, kind of like a Bernie Madoff monthly account statement. I doubt it’s even his real photo. Call me cynical.
I’m sooo tempted to start a blog satirizing his satire blog. He’s so wordy though I’m not sure I’d want to take the time it would require.
Actually, it’s not that simple, with regards to the etf’s.
If you are basing your math on the upside correlation, you are thusly missing the point.
It’s the fuckery in the swaps markets that is distorting the moves in SRS/URE.
IYR is irrelevant.
In no way does SRS represent the underlying price action in the equity of the etf. Therefore, and not just SRS, all of the inverse/upside etf’s, with leverage, are bad trading vehicles.
It’s the equivalent of flying blind. If you are only basing the movement of SRS, based on IYR, you are basing it on a lie.
As a point in fact, that makes you a liar.
Uhemmm:
LFC to $25.
Bet against me, see where it gets you.
Fly I forgot to ask you earlier … if you have a chance, could you tell me the name of the German chemical company the Sept 1929 Barron’s was profiling? Maybe Bayer or Rohm und Haas? It’s driving me crazy, I think there was another big German chemical company around at that time and I can’t remember the name. If you have the time, of course. Thank you.
Uh, these new lows by 1-12-09 are the same ones that were going to happen in December? The US Dollar will again become the strongest currency in the world and cash will be the no. one investment return – due to DEFLATION!!! That is according to http://www.moneyandmarkets.com
I’ve got questions popping out all over tonight, sorry, Fly.
I went long SRS on Friday, not because of how it trades in relation to IYR, but because it seem to trade as the inverse of VNO, at least for the last several months. So in a way for me it’s an easy short on VNO. Is my logic ok here?
No.
Better to short VNO outright.
Today’s action was pure fuckery.
Boca
I.G. Farbenindustrie AG
IG Farben, thanks!
Thanks for your advice on SRS/VNO too.
Fly,
How would you take advantage of the flaws in the inverse/upside etf’s?
I might be retarded, but does some of the movement correlate to the short-term distribution that ProShares is sending for SRS? Ex- Div date is the 23rd, so it seems like it makes sense. Or should I go back into my hole?
As I was reading the internet cleaning out my colon from all of the $1 hotdogs I ate at the Orlando Magic game last night I thought I would look up the name of the German chemical company IG Farbenindustrie AG which Boca and Fly spoke of in the previous comment (the name appeared on Fly’s 1929 Wall Street Journal). Turns out the Company held the patent on Zyklon B which was the gas used in the WW II concentration camps.
http://en.wikipedia.org/wiki/IG_Farben
http://www.jewishvirtuallibrary.org/jsource/Holocaust/farben.html
Just an early AM history lesson I thought was interesting.
Holy schit- IG Farben Werks! Those were the fugging gas chamber gas makers for Hitler!
(I am pretty sure, though on the Crackberry and to lazy to check it out)
If it is them, they also used Jewish slave labor to make the stuff- evil bastids.
______
Errr… Apparently I am also too lazy to scroll down and read all the comments before blasting off with a post. Sorry Caddy.
@@@
SRS literally trades as a mirror image to IYR during the day. I just can’t figure out wtf is going on with it sometimes.
Like today IYR and SRS BOTH opened down big…but then proceeded to trade exactly mirror image of each other.
Why the fuck is SRS down? Answer: Cause it’s a damn piece of shit! But no really, why?