Partial Recovery In Focus: QQQ, DDM, IYT, IWM
Tim Knight | Dec 30, 2018 12:26AM ET
Equities bottomed early on Wednesday the 26th and rocketed higher, partially undoing the damage for the Christmas Collapse. The DOW managed to tack on about 1500 points to its low, and I suspect equity bulls will enter 2019 limping but relatively optimistic.
As I look at the charts, some of them make me wonder “is that all they’ve got?” In other words, it only took a few trading days to push prices back up to shortable levels, such as with the Invesco NASDAQ (NASDAQ:QQQ):
Get The News You Want
Get The News You Want
Get The News You Want
Or the “Ultra Dow” (this is a two-times leveraged fund against the Dow 30 (NYSE:DDM):
Get The News You Want
Get The News You Want
I’m inclined to be patient. “Three days does not a recovery make,” as the sage might say, and there are plenty of other charts that look only “half-healed,” such as the Dow Transports (NYSE:IYT):
Get The News You Want
Get The News You Want
The small caps also look only “half-healed" by way of the Russell 2000 ETF (NYSE:IWM):
Get The News You Want
Get The News You Want
I tried on both Thursday and Friday to get cute and try to short some stocks that seemed they had a chance to weaken, and I got burned on every single attempt. I decided to just keep life simple with my “one and only” short of iShares 20+ Year Treasury Bond (NASDAQ:TLT), whose purpose is largely to be a governor against my impulses to get bearish on equities again.
Get The News You Want
In closing, the entirety of my positioning is as follows: in my big account, I’m short TLT, and that’s it. In my little “just for fun” account, I remain long Direxion Daily S&P Oil & Gas Exp & Prod Bull 3X Shares (NYSE:GUSH) (triple-bullish on energy producers), long Direxion Daily Financial Bull 3X Shares (NYSE:FAS) (triple-bullish on financials), and long TLT puts. I also am long QQQ puts (small starting position) and iShares MSCI Brazil Capped (NYSE:EWZ) puts, although I suspect those are going to stink for a little while. They don’t expire until March, however, so I’m OK with them.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.