ENERGY BEAR 3X (AMEX:ERY)

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

chk999's

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

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

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

hello? have you read others posts on short etfs? I would almost short 3x long etfs on the reasoning i see as well. great way to boost score.

ENERGY BEAR 3X
29.69 -2.52 (-7.82%)
4/24/2009 4:00 PM
MF 1*
52 week 27.84-88.76
GMX pick

First off, oil is at, or near, a low. This ETF will suffer if oil rises. Second, the structure of these leveraged ETF's is mathematically flawed. For example, when the oil index rises 10%, the ETF is designed to drop 30%. Mathematically, it should only drop about 24% to track the index. When the oil index drops 10%, this index is designed to rise 30%. Mathematically, this ETF should rise about 33% if it is to track the index over time. Notice that the actual results are lower than they should be regardless of the direction of the index. This flaw is the reason these ETF's are such a bad investment. In my personal account I'm short both the ERX and the ERY so that the flawed nature of these EFT's is isolated and I don't get knocked out due to volatility.

Bad news has battered the market and it is time for a rally. I recommend shorting this etf. Over the long term the expenses of this etf alone will eat away at gains. A combination of this and the fact that at some point the market will move higher will result in this etf under-performing dramatically.

Because Ultras Suck

After 50% plus declines in most markets, could there be a worse time to go triple short on any index.

One year price objective: $12