ENERGY BEAR 3X (ERY)

testing what's been said here on CAPs.
Do shorting all 3x ETFs mean easy net returns?
YES, IF, you rebalance once ratio goes 1.7 (or 1/1.7)

In a sideways or down market this would also translate into net points on CAPs
But your accuracy will be hurting, you'll mostly be 50% accuracy at best on this strat.
Current batch I am redthumbing here on CAPs today
ERX/ERY
DRN/DRV
TYH/TYP
Further on my personal thoughts on this strat:
using hypothetical scenarios, actual 3x #s from '09, and 2x funds from differing periods:

Worst case scenario, this strategy loses in a year: (5%)

Best case scenarios in a year: 10%+

Should expect most returns in a year: 3-7%
Remember, because of leverage, your broker will require to reserve alot of capital.

In implementing this strat, pray for two things: 1) Hope your short shares don't get called back by broker & 2) if in rebalancing you wish to increase position, hope you can short more.

This strategy may be a good play to allocate comparable to the fixed income/bond allocation of portfolio or completely replace that bond allocation with this.

I would say maximum amount you sell each position is 23% of face value of account. IE a $10,000 acct, short sell a maximum $2,300 worth of each ETF.

shorting all ultrashorts, bears, and other "leveraged" funds.

Ultra-shorts and Ultra-pros are all bad investments due to daily rebalancing

Free points and if you're lucky you can short these in real life. Just don't over-leverage yourself in these. They're highly volatile in the short term. Trust me from experience. I sold short some of the 3x bears 3 weeks before the bottom. FAZ shot up 300% and I got a margin call twice. Luckily I had enough (just barely) to cover them and overtime profited from it. Just make sure if you do short these, that you have the surplus funds to cover if it spikes 300% to 400%

Second verse same as the first.

While growth for the S&P has substantially subsided i don't think it has come to a grinding stop quite yet. The tide of the S&P will now be carried by energy stocks as the price of oil increases along with Natural Gas. It is a great time to get into energy companies that haven't already made huge rallies.

3x energy bear ETF
underperform reason: shorting the ultrashorts long term == free CAPS points.

We are running out of oil!

chk999's

broken

Half-life period of leveraged ETF is inversely proportional to its volatility.

- (Knock, Knock)
- Who's there?
- .... (scratching)
- Who's there ...?
- (scratch, scratch)
- What the? ... (sound of door creaking open)
- AHHHHHH!!!!!!
- ROAR!! (jaws snapping, claws scraping against wood, etc.)

... What did you expect the bear to say? It's just a bear.

(Anyways, I think the market is heading down for awhile, hence the pick)

Also check out this post of mine:

This Rally was Pure Weapons Grade Balognium
http://caps.fool.com/Blogs/ViewPost.aspx?bpid=217154

Based on my call that the rally is going to see a pull-back over the next few weeks I am giving all Bear ETFs a thumbs up and all Bull ETFs a thumbs down in the short run. I am only invested in a small sampling of these bear ETFs but in order to raise my CAPS score I entered several here.

The Oxen Group, for Monday, is looking at what
may be a bearish day. The lack of economic data,
fears of inflation rates, a lack of stable economic
data, and a lack of major news and economic data
tomorrow may hurt the ability for prices to move
up. Further, this should hurt the ability for oil to
move up. Oil prices were falling in Asia on Monday,
and Asian commodity expert Ken Hasegawa said this
price drive should be ending and moving back to $65
per barrel. The price drive has not been on
fundamentals and profit taking should occur very
soon. The Oxen Group agrees that profit taking will
happen this week, and in a bearish market, that will
occur much more likely. Gas prices jumped
seventeen in the last two weeks, which is anther sign
that a pullback is in the works, as the rise is not at
all based in fundamentals. With this said, Direxion
Daily Energy Bear ETF (ERY). This ETF moves at a
high volatility, meaning that oil's move backwards
will be even more beneficial to you. If fundamentals
are not enough for you, technically, a pullback is
necessary. Oil is overvalued, overbought, and
moved too high, too fast. ERY is extremely
undervalued on Relative Strength Index, has moved
way too low on fast stochastics, and near its lower
bollinger band. These technicals show a sign that
the prices should moving back up. Oil prices should
take profits from the gains last week. Get into ERY
tomorrow and rise the decline in oil prices.

www.theoxengroup.com

Shorting the short is pretty much cheating over the long term.

trying to boost my accuracy

Combine the losses incurred by constant rebalancing with the inevitable energy bull market, and this should be a big long term loser.

Fading every pick made by Ultralong

Market neutral arbitrage strategy. Has yielded around 200 points since mid March. The accuracy, as expected, is 50%. See blog.