Friday, August 22, 2008

Getting Shorter the S&P 500 via SDS

Here is an updated chart on the Spiders illustrating the reasons for my entry into the SDS. I like the look of this very much. I also feel the need to have a bearish bet on the table as what is unfolding here in the capital markets is nothing short of historical. The need is such that I am getting short a 2nd unit of the Spiders via SDS here at $64.50 leaving my stop alone.

Regular readers know my thoughts that this was the mother of all credit bubbles and the ramifications are slowly spreading to the broader economy. I must have a bearish bet on the table for the moment when the short bus riding equity boyz wake up, either voluntarily (don't hold your breath waiting for this) or via an outside influence, like a margin call, client liquidation, lender fear or the like.


Good speculating to you all and never ever forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units of Powershare Agriculture ticker DBA @ $35.35 stop $34.79
Long 2 units of XTO Energy ticker XTO @ $45.40 stop at $44.48
Long 1 unit Currencyshare SwissFranc ticker FXF @ $92.70 stop at $90.68
Long 1 unit Ultra Oil & Gas Proshares ticker DIG @ $84.35 stop at $79.68
Long 1 unit U.S. Oil Fund ticker USO @ $96.95 stop at $91.38
Long 2 units Ultrashort S&P500 ticker SDS @ $64.65 stop at SPY $130.58
Short 1 unit Int'l Bus Machines ticker IBM @ $129.05 stop at $128.56
Short 3 units FedEx ticker FDX @ $87.10 stop at $88.16
Short 2 units of Apple ticker AAPL @ $178.05 stop at $182.76
Short 1 unit Blackrock ticker BLK @ $218.50 stop at $218.126

3 comments:

Anonymous said...

I'm curious why you use SPY to define triggers, while trading SDS. If you're using technicals (which I assume you are), why don't you derive them directly from the SDS charts?

PS: I've gone back and forth on this issue myself, but have eventually settled on using the actual charts (eg, SDS, QID, etc). But, maybe I'm missing something.

Terry Steichen

Harleydog said...

Terry,

thx for your post. I am using the underlying chart, say SPY as opposed to SDS simply because the SDS, DXD, SKF et al. are derivative securities which must follow their underlying security.

Yes I watch the charts on these no doubt, but I feel more comfortable using the underlying as the basis for a trading entries & exits.

The underlying is the foundation and its what I am focusing on, just as an option trader would not chart the option but rather its underlying security as well, hope this helps.

HD

Anonymous said...

HD,

I understand your basic point (focus on the foundation not the derivative). But on the other hand, that suggests that when the foundation and derivative get out of whack (as they occasionally do), you'll make fewer mistakes using the foundation. I think there's an argument the other way, that what you're investing in (the derivative-based strategy) is where your primary focus should be (as in setting specific entry and exit points).

Terry