I am back in the saddle: Since returning, I am experimenting with the new ProShares ETFs; I own the Nasdaq Q short (PSQ) and the Dow short (DOG).

I am not interested in shorting the leveraged ETFs — it seems too inefficient.

Having just gotten back, I am still pretty cash heavy, and looking to ease into some positions slowly. I am looking to put some money to work soon.

>

NOTE:  I am not yet endorsing these ETFs.  I wanted to trade with them (rather then outright short the
Qs/DIA/SPY) to see if there is any advantage to working with them. Yeah, you can watch them, but its not the same as owning them — even if its a small position. Focuses the mind and all that.

They are not very liquid yet, and
trade with a big spread.

Other than you can get short in an IRA/401k accounts — I’m not
sure if there is any advantage over shorting QQQ/DIA/SPY.

>

UPDATE July 10, 2006 3:30pm:

NO!  This is not a trading call — this is merely me playing with these ETFs to see if they have any value. 

You can see why the attorneys hate this stuff here — its so subject to misinterpretation.

Category: Markets, Trading

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

50 Responses to “ProShares Short”

  1. khare says:

    Barry,

    I subscribe to Ritholtz Research and the only signals I have from it are that you went long and then closed out the QQQQs.

    Is this an official signal?

    Personally I’m still in cash with leap puts on the indexes I purchased back in May.

  2. M L says:

    Why don’t they give you a column on Realmoney.com Barry? I thought those other guys were nuts buying QQQQs on Friday, and more again today.

    BR: I have a column at RealMoney — and TheStreet.com — I’ve been so busy with the new fund, the new site, and this blog, that my output has declined there — should be back to usual by the fall. and

  3. jab says:

    I did not think the leveraged short ETFs were out yet? Are they? If so what are the symbols. Thanks to anyone that knows.

  4. ec0nj0hn says:

    I subscribe to Ritholtz Research and the only signals I have from it are that you went long and then closed out the QQQQs. Is this an official signal?

    seconded. no offense, barry, but as a subscriber i’d appreciate getting this kind of info ahead of a posting on the bigpic. the suggestion of earlier access for subscribers to any sort of position related posts or a forum behind login on the rra site for them is an idea that should be explored.

  5. No!

    This is not an official trading call — I’m merely playing with these ETFs.

    If you followed the trading alerts, you should have been moving your stops losses up, and probably have gotten stopped out last week (I came back and discovered my DIA long was stopped out Friday).

    Thanks for the comment, though — I will clarify that ASAP via the alerts

  6. BB says:

    Here’s the announcement on the ETF’s:

    http://biz.yahoo.com/prnews/060621/nyw116.html?.v=59

  7. BB says:

    One advantage of these for any Canadian Investors is that these will be held in your long account instead of your short account, so profits will be taxed as Capital Gains instead of Income (50% savings).

  8. Mark says:

    Tremendously bullish action out of the indices today. Time to get long.

  9. Bynocerus says:

    Am long. Have been long a for a few weeks. Not terribly encouraging action, but the gloom is starting to get thick. Will take my lumps soon if necessary, but hanging on a little longer.

  10. tom says:

    mark,

    tremendously bullish action today?

    which side of tremendous are you talking about, the side that has the qqqq’s skirting with a new low close for the year or the action that all our single friends talk of in internet “dating/fluid swapping”?

    try to keep the hyperbole to the “other” sites.

    thanks.

  11. Mark says:

    Don’t know who “tom” is but I think the regulars here recognize my sarcasm (especially since I have called this rally “BS”, this market a “pig”, and frequently refer to the fact that supply is greatly outstripping demand here and that even on the bounce, demand never took off (check Lowry’s). ) But thanks for the advice. (I think I’ll ignore it though).

  12. We need a sarcasm indicator!

  13. tom says:

    oh, you’re one of the “regulars”. my bad.

    you’re wit was just so blinding, it was hard to see the sarcasm for the trees…

    hey, where’s the kegger tonight?

  14. yc32 says:

    A little late, but still amusing. See the best actors from Italian side. No wonder they are champs.

    http://www.youtube.com/watch?v=QRO626ImQek

  15. Alaskan Pete says:

    Seems like alot of people are sitting heavy in cash. I’ve got a small remnant of a coal position left (CNX: sold 3/4 of it last week) and a small short Qs/long DIA pair. Otherwise all cash, paitently waiting….all summer if necessary.

    HET is starting to look ripe for a long entry. My work suggests that a buy signal will trigger within the next 2 weeks. Pull up the weekly and daily charts on it and you’ll see what I mean. Channel/trendline support, oversold and divergences in oscillaltors, etc.

  16. Bynocerus says:

    Tom,

    Flame on you crazy diamond!

    Mark,

    I got the sarcasm Mark, and although I’ve been wrong three times in a row now (and dropping my YTD numbers to + 8.5%), I’ve got to disagree with you. There really does seem to be some despair out there, and I’m not sure we don’t put in a bottom this week. Personally, I’m praying for a capitulation day so the market can start acting a little more orderly.

  17. JL says:

    MYY (ETF inverse of the RUT) volume jumped significantly today, from an average volume of 30,000 to 1,054,000. That must be Barry ;)

  18. Mark says:

    Byno-

    I am not certain we are in STRICT disagreement but, man, I am not seeing despair. I think I sense “resignation” though. Resignation that this market is too iffy until it moves lower. The institutions are holding their money back and I don’t think they buy until much lower still. How much I don’t know. But until they start buying I don’t see how this thing moves significantly higher.

    I’m not thinking this goes straight line to 8800 on the Dow. Summer rally? Yeah but a very small one just like this one. Then it rolls over again.

    Anyway, hedged to the hilt .

  19. Mark says:

    Barry-

    I will just type “SARC” behind my posts that are sarcastic. Wait a minute. Since that’s the majority of them perhaps I should type “NOT SARC” behind the ones that are not — ah heck this is too complicated.

  20. Bynocerus says:

    Mark, Like I said in an email to Barry concerning the recent trolling problem, this place has become like Cheers: everyone knows the regulars. And speaking of regulars, where o where is B of late?

  21. Mark says:

    B is undergoing another uh NAME CHANGE OPERATION. He is coming back as “Daphne” according to reports I get. His posts will be very kind, considerate and well downright GENTLE. Even supportive. The entire board won’t know what to do. Frankly, I don’t know if I am going to be able to take it.

  22. tom says:

    the way i see it, there’s a brain drain on the way since you guys have established yourselves as “regulars”.

    i may be contributing to this right now, but you guys (mark) smell of arrogance and quite frankly this site is the alternative to that place. in any case, we all know what happens to the arrogant investor. there’s one born every minute.

  23. To answer another emailer — Yes, I am short in the fund, but not recommending shorting in RR&A — for too many reasons — I can be more nimble than most investors, the degree of risk involved, etc.

    I am not looking for anytihng more than a few percentage points move down; That’s not the sort of trade anyone can predict with any degree of reliability — I do think risk lkevels have risen, and that’s why I would cut the longs back some;

    I only make an aggressive RR&A rec when I have a very high degree of confidence in a given trade — and when it is for potentially greater than a few percentage points — that combination is a relative rarity . . .

  24. Bynocerus says:

    I’m in my third largest drawdown in eight years at the moment, so I don’t want to give anyone the impression that I am particularly confident, nevermind arrogant, right now. At the same time, I’m still beating the Naz by over 15%, and I called both tops this year, so sometimes I’m good for something.

    Mark, Trader, Pete, B, jkf, etc have been posting on this site for a good while now, so it’s not too hard to discern their meaning for us ‘regulars’. And while you may very well be our better in spades, it’s probably not a good idea to demonstrate it by coming on the board and ripping one of the most consistent, most thoughtful posters on Big Picture. Just a suggestion.

  25. trader75 says:

    Hey cool, I dig the thought of being a regular. Can I be Cliff Clavin?

    Listen up fellas, as we dissect this market, it is important to note that it was, ah, discovered on a space mission that a frog can throw up. The frog throws up it’s stomach first, so the stomach is dangling out of it’s mouth. Then the frog uses it’s forearms to dig out all of the stomach’s contents and then swallows the stomach back down again.

    Now, ah, I hope I’ve made my point clear to all you gents as to why it’s a terrible idea to be long the Q’s here.

  26. Kevin says:

    Can I be that creepy guy that is always over by the dartboard but never gets any lines? I listen to everything, but never pipe up.

  27. brian says:

    Mark. Using HTML the tags for typed snark look like this….
    /-snark//

  28. brian says:

    btw tom, i don’t get arrogance coming off of Mark. Gallows humor maybe…
    now YOU on the other hand should switch to decaf…

  29. Alaskan Pete says:

    Trader75, you can’t be Clavin because we know who you really are, J.L. (Wondering how I know that huh? Let’s just say I have close contacts at “The Agency”).

    We know all sorts of things…except the direction of the market tomorrow.

  30. trader75 says:

    Ha! That’s just another fake identity to throw the dogs off the scent. I’m actually a highly trained assassin with a heart of gold. Perhaps you have seen my chronicles: http://www.drmcninja.com/

  31. whipsaw says:

    hmm, well I assume that this short index etf stuff is aimed entirely at people who have restricted accounts of one kind or another, otherwise I can’t imagine how it would be very appealing. But maybe I’m missing something that Barry will share as he experiments.

    More broadly, it’s probably as good a time as any to get short in one way or another as I suspect that there are going to be a lot of people disappointed with earnings and/or guidance over the next few weeks and the latter part of this week will probably be quite volatile.

  32. DaveF says:

    Wait a second, I’m the one that rarely posts, reads everything, and often gets confused. I only live near the Agency, and I am changing my name now. Please no sarcasm, I have enough trouble when y’all play it straight.

  33. I have a few interesting thoughts about the Qs and big cap tech coming out in a few days — stay tuned

  34. JRG says:

    heads up trader-folk:
    ever higher CPI and PCE numbers are ‘baked in the cake’ through year-end (and then some)
    Be very nimble!

    (or very defensive)

  35. oxbird says:

    Is Profunds or Rydex going to offer a double-inverse ETF?

  36. whipsaw says:

    Couple of things to think about:

    _the yields on 2/5/10/30 year bonds are now all below the short rate (i.e., the market is betting on recession)

    _Lowry’s Buying Power Index reached a 15 yr low last week (http://www.minyanville.com/articles/index.php?a=10727)

    What I think that this collectively means is that there is a lot of cash on the sidelines that is not likely to get back in any time soon. You don’t have to have a lot of sellers to make a market fall, just a lack of buyers, and it seems to me that we are pretty much there now.

  37. Mark says:

    Econoday’s take on the hunormous Consumer Credit figure:

    “Consumer credit rose $4.4 billion in May as a gain in revolving credit, up $6.6 billion, offset a $2.2 billion decline in nonrevolving credit that reflected soft vehicle sales. Having drained their savings and no longer turning to home equity loans, consumers may now be turning to their credit cards. Limited financing options, combined with soft job growth, may point to slower gains ahead for retail sales.”

    John Hussman’s reminder about the meaning of “cash on the sidelines” (not sure I agree with him about this from the perspective of EFFECT):

    http://www.hussman.net/wmc/wmc060710.htm

    Would love Barry’s opinion on this….

  38. Tom in Indy says:

    I have heard the double short etf’s are going to be released soon. I use the new single short ones for my IRA. Helps to tamp down on volatility, saves on my prilosec bill. Tom in Indy

  39. BDG123 says:

    It’s Daphne. I’m back. I was on vacation too but I posted some stream of conscience BS a few days ago.

    Cliff: “Yeah, well look, on the face of it, this is all primafacious, noncorpus interuptus anyhow.”

    Or at least that’s how I feel about this market.

    http://cheers.tvheaven.com/cliff.html

    So, which one of you losers holding the end of the bar down with your big fat ass is Norm?

    Being long here is a mistake IMO. My selling pressure “doo-dad” just made a new low today. Too many people are relying on oscillators to enter what appears to be oversold markets. People are also too enamored with sentiment. It will fail in one direction or another at some point. It has to. Otherwise, we’ll be range bound between 9,000-12,000 for the next three hundred years. Too bullish then too bearish. You think we are going to get a rally if the market is going to hell in a handbasket simply because people are worried? How worried is this? The general consensus amongst advisors is still extremely high allocation to equities. Almost as high as the late 90s. Sentiment in the metals is still of the chart bullish. Is that quaking in the boots bearish? Surveys are nice play toys in a bull market or a transition from bull to bear. Sentiment stayed bullish for years on end in the secular bull market. It can get bearish for months or a year or more on end in a bear market and we just may not see any significant rallies as we had in 2000-2003. Time will tell.

    I’ve tinkered with some intraday and swing trades here but I’ve not gotten any buy signals on the daily. If I could bottle the sentiment on this board, we’d rally to 36,000. Most on here are so gloomy they need an IV drip just to keep their heart pumping. But they are gloomy about the future of mankind not just stocks or the economy.

    If you haven’t noticed, we’ve had a rally for a few weeks . It just hasn’t been in technology.

    The NDX had a bear flag we pierced today. Will we break below the close of today? We had someone step in at the close to try to keep us above October’s lows. If we pierce this, and there is no reason to believe we won’t because the semis already have, we are likely headed down with a possible acceleration. Lower lows is not the start of the next cycle.

    I think the calls for stagflation are going to be proven wrong. And I think those expecting a strong low in October might be disappointed. Anyone who is bearish yet isn’t calling for the end of mankind is expecting an October low. A tradable low? Maybe. Don’t bet on “the low”. Remember, we are in likely in a metals and energy bubble. And those bubbles affect input costs into the economy so their effects will likely be unpleasant. We’re still at $75 oil. Anyone who thinks we will work out those imbalances in a few months, ie, by October, will likely be disappointed. And, anyone who thinks the 2 billion people being added to the global bull market but are making less than $2 a day can stomach $3 a gallon gasoline is smoking some ganja. And neither can their governments afford it.

    October of 2007 is the call from the cheap seats. Let’s see how much forecasting folly is actually folly.

  40. Mark says:

    “Being long here is a mistake IMO. ”

    Damn! Barry was just about to let us loose on the QQQQs and some big cap tech according to the way I read his earlier post.

    See you tomorrow Daphne.

  41. whipsaw says:

    per B:
    “October of 2007 is the call from the cheap seats. Let’s see how much forecasting folly is actually folly.”

    That isn’t a bad guess- I think that this October (or maybe September) will be more of a ledge than a bottom. But you may not be allowing enough time for the cyclical bear to work itself out before a minor bull begins. At any rate, I will be looking for signs of utter exhaustion before I go long in anything to speak of.

    It’s instructive to look at weekly and monthly charts of $SPX to filter out most of the noise. Those don’t look very good at all, altho the monthly is still one step away from actually turning down.

    But my Plan is to make money out of this at the expense of John Q. Sucker and Sucker Wealth Management, LLC, so I am not at all gloomy. In fact, I kind of enjoy watching Reality swing his scythe. :)

  42. Craig H says:

    A little more technical cheer to spread.

    The High Low Logic Index (associated with the spooky “Hindenberg Omen”) is spiking again. In April it went from around .56 to 1.58 – a month before the May slide. In the past two weeks it’s come back up from .51 to 1.20.

    A spike in it doesn’t always mean the market will decline, it headfakes sometimes, but I’ve yet to see a decline that wasn’t preceded by a spike in High Low Logic within the previous 8 weeks.

    Just another reason to be cautious on the long side.

  43. jab says:

    Whipsaw – I agree with your “October (or maybe September) will be more of a ledge than a bottom.” comment. I have been short homebuilders for the last year and while I think the still have more downside I am begining to roll out of that and short the indexes when they rally. I plan to have this transition about complete by October.

  44. Bynocerus says:

    Can I volunteer to be Ted? I know some of you guys think I’m a little nuts for thinking Katie Couric is a babe but Maria Bartoromo is not, so I’ll make you think I’m even more nuts by suggesting that, after losing all that weight, Kirstie Alley is one tough mama. I always preferred Rebecca to Diane anyway.

    Or I could be Lilith, since the market has made me its bitch for the last three weeks.

  45. frank says:

    your woody. go clean the bar.

  46. Mark says:

    Katie Couric? OMG! Well I guess it’s not SO bad considering I had a thing for Markie Post at one time….

  47. Bynocerus says:

    I’m not saying she’s the babiest babe ever, just that she looks great for her age. Now, she’s not in the same league as Halle Berry, who isn’t that much younger, but still a looker. Doesn’t mean I wouldn’t prefer Molly Sims, I’m just sayin…

  48. BDG123 says:

    Hey, Markie Post had a body to die for. Maria’s very attractive but her on air persona is sometimes unattractive. That Bernanke situation and the post mortem she did was absolutely first rate trailer trash.

    That might have been the most unprofessional piece of TV journalism I have ever witnessed. The set up surrounding it that CNBC participated in was nearly as bad. As, I recall, the market had a violent reaction when it was reported late in the day as if big money knew of it in advance.

    If we are really picking favorites, how about Jessica Alba? If you are bored out of your mind, 99 “G” rated profiles of the hottest famous women for some afternoon drooling session.

    http://www.askmen.com/specials/2006_top_99/index.html?LEFTNAV

  49. trader75 says:

    Yo Daph, that list is wack. Kate Beckinsale at 75? She should be top 20. Monica Bellucci should be top 5. And every fifth or sixth entry qualifies for “say what”? All in all, an entertaining 5 minutes though.

  50. BDG123 says:

    I totally agree with KB. Monica Bellucci top 5? I don’t know. But Kournikova at 99? There is something super hot about uber athletic babes for me. 99? Are you kidding? If Iglesias, one of the most beautiful men on earth thinks she’s good enough for him, she’s surely not 99. And, yes I said beautiful. He’s a pretty boy.