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3x ETFs, Natural Gas, White House Banking Summit



March 27, 2009 – Comments (1) | RELATED TICKERS: TZA , UNG , FAZ

For anyone that looks at the portfolio I currently have in place on My Caps, you'll see three different sectors that I'm in:  The Ultra- and 3x-ETFs, small-caps that have been obliterated from the bear market, and value growth companies.  Of these three sectors its apparent to anyone that the 3x ETFs are the items that can bring the biggest gains (and losses) to your My Caps score.  What many people still arent aware of is what great hedges these ETFs are for everyday investing.  Keeping a hedge in markets like this is critical.  If you're 100% long or 100% short, daily investing can be a roller-coaster ride.  Instead, being short those sectors with extensive moves and being long those sectors which have been underperforming will (in almost all situations) allow you to outperform the overall market.  My recommendations in this sector would be the FAS/FAZ (3x Long/3x Short Financials) and the EYG (3x Short Energy).  I bought the EYG on Thursday afternoon and will continue to hold this until oil gets back below $50. 

Speaking of energy, I also bought the UNG earlier this morning when Nat Gas reached $3.70.  Nat Gas reached $3.63 in the after-market this evening.  I don't see Nat Gas moving to $8 in the next few months, but a move back above the 50-day (currently around $4.50) in the next few weeks looks certainly possible... and an eventual move back to the 200-day moving average as it continues to drop (perhaps this summer in the $6-6.50 range) is possibly as well.  Even at $6, this ETF would move up 60-70%.  The UNG is currently my hedge versus the EYG (since Natural Gas stocks are very minimal in the EYG). 

Finally I wanted to mention the White House Banking Summit today.  Great theater... but that's about it (much like the Presidential News Conference earlier this week).  The only two newsworthy items were from the CEOs of JPMorgan Chase and Bank of America... both of whom said that numbers were WORSE in March than January and February.  That's encouraging...

One last note... earlier this week I stated that we'll see 740 before we see 900 again.  We're smack in the middle of that range.  We may test 8000 on the Dow next week... but we're headed lower folks.  I don't think we get back down to the old lows, but 740 is the goal I see - and when we find out next Friday that we've lost another 600,000 jobs in March its down, down, down...

1 Comments – Post Your Own

#1) On March 28, 2009 at 3:51 PM, VIS46 (38.88) wrote:

Good post. I will fallow your advice to better my CAp Score. Why Banks bottomline was not good in March is confusing.Jan,Feb must be an abberation.So they will lose this Quarter also.

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