Short Russell 2000 ProShares (RWM)
Exchange traded fund
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I wouldn't try this with *real* money!!
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I think the rally in the markets has peaked and we are now in for a large slide down. I spell out my case in this blog post:
Still Bearish: FA and TA on S&P 500, Observations on the Economy
http://caps.fool.com/Blogs/ViewPost.aspx?bpid=192777&t=01008419310939784033
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Testing a theory here with this account, shorting all short ProShares for starters.
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Fading every pick made by Ultralong
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Shorting some more.
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Directionally market headed lower from here. Plus all my builder stocks are rated and don't see any rating changes any time soon. Hedge with short ETFs not ultrashort ETFs. There has been enough discussion on CAPs regarding the time decay of ultrashorts
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I called it exactly right the last two times, bouncing in and out of this pick. Let's see if I can do it again. As I see it, this pick (one of a collection of Short ETFs) is due for a rise as the rest of the market sours on Geithner's plans. The market is still well-overvalued, and needs to fall 25% more (down to about 5500 on the DJIA) to even begin to come in line with the traditional P/E ratios of bear markets. It's not going to fall all that way in one fell swoop (hopefully not, for that would really freak out those who've not been paying attention), but I do anticipate it oscillating and trending downwards. Until that "bottom" is finally reached, however, I intend to make some points (and some money on limited ETF selections) during this time.
I may be a little early on this one (just like the last time I played this swing), but from what I'm seeing in the Slow Stochastics regarding this ETF, it is due for a turnaround, a rise from this point. I'm hoping this will happen in the next 2-3 weeks, if not sooner.
To me, it's clear from the Slow Stochastics of some big ETFs that they are due for a turn-around. Take a look at TZA, ERY, BGZ, QID, SDD, SDK, RWM, SFK, and SJF, to name a few. All are below the 20% "oversold" line, some below the 10% line, meaning they are more likely to rise than fall further, and soon. The "Williams%R" indicator, which leads the Slow Stochs by a few days, is showing even greater "oversold" tendencies, and in some cases is starting to head back up. Geithner's plans released on March 22, 2009, certainly put a hold on this ETF rising, but that hold will be only temporary, as I see it.
Again, like I wrote last time, if investing for the masses is anything, it's psychological. So, I think we'll see a general fall in the major indices starting next week as despair once again begins to settle in on Joe Investor and people realize that Geithner's plan really only help out the banks at the taxpayers' expense. This downturn should run for 2-5 weeks, depending upon what actions the Fed takes (like putting a ban on short selling again, which would not surprise me). That sort of ban would weaken my case for these ETFs, but it's not going to stop the freight train that is coming down the tracks.
Finally, let me be absolutely clear: I still believe we are definitely NOT at THE bottom. We have at least another 25% to fall:
http://caps.fool.com/Blogs/ViewPost.aspx?bpid=137397&t=01009471911616523983
If you do not have time to watch your purchases over the next 2-5 weeks, don't play the game. I have a feeling it's going to be very volatile and too risky for most people (probably including myself, if I had any sense at all). Good luck!
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small caps are set to outperform
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etf short
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Short Russell2000
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short the shorts
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shorting the shorts
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S&P at resistance at 1395 will pull back. I'm calling a temporary top today in the S&P at 1395 (yes I know I'll look like an idiot if I'm wrong but that hasn't stopped me before) It's 2:13 PM we'll see.
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Stock bull 3/17/2008.
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The only thing holding this market up is Bernanke's rate cuts and funny business perpetrated by the big financial companies at the behest of GW Bush. The U.S. is $9 trillion in debt and running an ever increasing annual deficit. The country is in a real pickle now thanks to historical Greenspan rate cutting and Hank Paulson's helicopter money. Thank you Goldman Sachs and Mr. President. There's lots of misery coming. It's the end game and we all lose.
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This is a very 'cheesy' (imho) tactic that I got from another Caps player. Over the long haul stocks go up. So shorting all of the ultra-short or short ETFs will do better than the SPY.
If stocks go up then the short/ultra-short ETF will be negative but the SPY will be positive. Add in that the ETF has a management fee that will deduct from its return and this is fantastic for the shorts!
This strategy is incredibly sound but I don't really think it is what Motley Fool had in mind when they started Caps.
I'm happy to see that Motley Fool has made it so that short and ultra-short ETFs don't count toward the 'skeptic' charm (since it is an ultra-bullish position). Others have explained why these picks should still count toward the 'underdog' charm and I agree with their reasoning.
I'm now shorting all of the ultra-short ETFs in CAPS. This is a very sound long-term that I recommend to everyone to improve their CAPS score (as long as you think stocks go up over long periods of time). If you know of any short or ultra-short ETFs or closed-end funds that I'm not already using please pass them along to me. Thanks in advance!
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Shorting the shorts...long term.

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