Tomorrow promises to be a wild day. New margin rules for double- and triple-leveraged ETFs come into play, and this will have the effect of draining liquidity from the market. I'm anticipating some squeezes, but since both the bullish and bearish ETFs are equally affected, it could end up being resolved as wild price swings or temporary dislocations as both bullish and bearish ETFs get sold equally. Since we are exposed to these ETFs, we could get stopped out of our positions only to see prices swing the other way. If you own these and think you can afford the extra risk, consider selling on a close below the sell-stop rather than a simple breach.
| Current Holdings | ||||||
|---|---|---|---|---|---|---|
| Ticker | Basis | Closing Price |
Perf. | Sell-Stop | Addl Exit Guideline | Chart |
| TWM (trending) | 27.58 | 29.65 | +7.5% | 27.27 | N/A | Chart |
| SMN | 9.31 | 9.02 | -3.1% | 8.61 | N/A | Chart |
| SRS | 9.02 | 8.71 | -3.4% | 8.45 | N/A | Chart |
| SSG | 23.86 | 23.15 | -3.0% | 22.49 | N/A | Chart |
| EEV | 12.01 | 11.76 | -2.1% | 11.10 | N/A | Chart |
If the market does break Friday's lows, we want to be short. But rather than taking on new 2x funds, let's try the 1x funds, which might be beneficiaries of the margin requirements change. The exception being DUG, whose 1x counterpart, DDG, is thinly traded. A few ideas on the long side, too.
| Ticker | Entry | Exit A | Exit C | Chart |
|---|---|---|---|---|
| HMY (Harmony Gold) | 11.31 | 10.94 | 10.73 | Chart |
| AONE (A123) | 16.81 | 15.79 | N/A | Chart |
| ARIA (ARIAD) | 2.36 | 2.13 | N/A | Chart |
| PSQ (Short QQQQ) | 46.78 | 45.99 | N/A | Chart |
| DOG (Short Dow 30) | 53.58 | 52.79 | N/A | Chart |
| DUG (Ultrashort Oil & Gas) | 13.06 | 12.49 | N/A | Chart |
Please refer to "How To Trade The Ideas" (right-hand side) to read this table.
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