Never Ending

Overnight the ECB announced rate cut and Greece wanted its prime minister resign thus no referendum; therefore, the European mess were solved and the market was free to rally.  And off it did, rocketing nearly 2% and retraced 61.80% of the double dips enjoyed by the bears earlier this week.  I added 600 SPXU in the process.   The bullying by the bulls seemed no end in sight.  Technically the October high of 130 needed to be back-tested for a proper top.  I will need plenty of day trading a la Al Brooks’ price action posted yesterday to help me stay sane for the ordeals yet to come.

Portfolio Value: $124,000

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2 Responses to Never Ending

  1. Steve says:

    It is not a good idea to hold SPXU for a long time trade. It is leveraged ETF, and the price deflates over time. The more volatile the market, the faster the price deflates.

    For example, today SPY is $126, and May high is $135.80. but when you look at SPXU, today’s price is $13.95, it is already below May low at $14.32. In another words, SPXU value has lost about 10% since may by just holding it.

    You can google for leveraged ETF problems on the web, and you will find lots of articles talking about it. Here is one : http://www.investopedia.com/articles/exchangetradedfunds/09/broken-leveraged-etfs.asp#axzz1ciLGMSc6

    • Thanks for your comments. I’m fully aware of it. As I have responded to other similar comments before, I didn’t intend to hold too long. I also think the directional movement will override the devaluation overtime. I feel more comfortable holding it than to short the shares or to buy put options.

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