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Registered User
Joined: 11/7/2007
Posts: 49
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This seen to be under way.
Today's drop had nothing to do with GM earnings, or warnings from goldman sachs, or citigroup or any other B/S they want to tell you. Iran was the point of impact, and I assume there will be a lot more to come just from there.
Today Iran declare they will no longer accept the dollar as the default currency to purchase oil. This will set a precedence for many other countries to do the same.
The devaluation of the dollar as I discussed before will neither benefit this country nor help the economy as much as "they" told you it would. Just a cheap shot at decreasing the debt.
I think most folks around the globe are getting the picture by now.
I commented before that the valuation of the markets did not meet the current economic condition regardless of what "they" tell you. You are being told lies.
Anyways I know it is hard for some of you to short the markets, but that has been, and I expect it to be the norm for a while now.
The markets are aiming right now at breaking the support it had from March highs.
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Registered User
Joined: 6/6/2005
Posts: 1,157
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Alexandria -- I'd love to hear your thoughts on this inverse relationship. The white line is the Dow, the green is the Oil & Gas ultra short. At first I was a little confused, what with oil prices rising...but this fund actually shorts the XLE. If the market is heading to March lows...where would that take the DUG? Hmmmm. Looks good to me.
David John Hall
P.S. Forgot to change my setting to GIF -- so this pic may take a few minutes to load...but it's worth it.
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Registered User
Joined: 1/28/2005
Posts: 6,049
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If we view the Short Energy fund as inverse. That would
mean correlation between Oil (or oil stocks) and the
Dow.
While there are general coincidences. (fear and
greed sweeping the markets at the same time)
In general economic strength leads to more
demand for oil. Economic weakness leads
to less.
Thanks
diceman
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Registered User
Joined: 4/18/2005
Posts: 4,090
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for what it's worth Martha has been cautioning her students on these sectors as continued buys and or holds.. not that there wont be up swings but he risk and probability of down side from here is greater. she called the housing bust before I was a student in 05 and cautiouned us about going long those sectors.... Then a few months later said thta if we were to go short those would be the sectors to focus on... Way before the News began to jump on the housing bust band waggon.
I think the sentiment indicators are a big part of those sorts of calls... the excessive bullishness after a considerable rise. So now the logic is ... bearishness is all around... is it excessive?.. I dunno this is my fist panicked selloff that has gotten this much emotional coverage. I know there is an indicator called "Odd Lott short Sales" that tracks the contents of it's title (obvious) and is used to help guage bottoms, and there is an "Advisor Sentiment Index"... which also aparently works in reverse. This is the product of polling several advisors... the logic being that despite their "Profesional" place in the industry for what ever reason when to many become bearish or bullish the oposite stance should be taken... the concept still baffels me. I guess becasue they are so "in it" all day every day watching the mounting losses has the same psychological affect then eventually as it does on the uninformed investor.
anyway .. i think you do backstrokes across the pools of pessimism abounding now.. which in it's self is a serious caution.. but then the stocks are falling.. and this is a condition that has been building for some time..... So... I'm a bit confused and have decided to play it a little safer and cut way back on the trading...and quit paying so much attention right now anyway. I think things are a bit over sold for my entry rules now ... they may go further but I see it as higher risk to open a bunch of short orders now.... Pluss with the holiday coming up I expect to see some short cover action soon.
Admittedly the news is nearly worthless any way. Every day it's "pin the reason on the calamity" . Three days ago morning futures were up signifficantly but headlines claimed they were down. I've been interviewed twice by news papers and both times they got so much stuff wrong about me it was silly. This is not uncommon as I understand. So how are they suposed to get this heavy financial stuff right?
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Registered User
Joined: 4/18/2005
Posts: 4,090
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David, how did you plot both of those on the same chart??
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Registered User
Joined: 6/6/2005
Posts: 1,157
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Hey Scott,
It's a comparison symbol. You can plot it by clicking chart template, comparison symbol. I've found some interesting inverse relationships. I don't like to go short, and so I thought a way to capitalize on some of the downtrend would be to look for inverse relationships as expained by John Murphy of Stockcharts fame. I saw an interesting DVD where he discussed inverse relationsips and when you find them they can tell you a lot about market movement.
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Registered User
Joined: 4/18/2005
Posts: 4,090
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I learn new things about TC all the time! Ididn't know we could do that?
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Registered User
Joined: 9/25/2007
Posts: 1,506
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Interesting enough Bigblock ...
Back in the early 90s ... Jimmy Rogers more or less stated that this would happen ...
Rogers ... and his partner Geoge Soros have made a ton of money knowing which currencies to sell short ... and pretty much when ...
Rogers told what a HUGE proportion of outstanding US currency was held in reserve currency pools by different governments around the globe for the purpose of acquistion and dispostion of commodities ... I want to say that it was more than half ...
And when the day came that the USD was no longer the only game in town ... or was not the preferred medium ... that it would mark the beginning of a devastating economic event for the US ...
He also stated ... that it would not be one of our "friends" to do this ... that it would be someone like Libya ... but that the rest of the pack would quickly follow suit ...
Well ... here we are ....
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Registered User
Joined: 2/5/2006
Posts: 1,148
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and those weelky index chart look like the end of the world.
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Registered User
Joined: 10/7/2004
Posts: 2,126
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David DUG simply seeks daily investment results, before fees and expenses, that correspond to twice (200%) the inverse (opposite) of the daily performance of the Dow Jones U.S. Oil & Gas Index
That is the Dow Jones US Oil & Gas Index, which is compressed of I believe about 86 stocks - ETF.
Why are you comparing to the DOW Jones Industrial Average??
Yes any Reciprocal Proshare investment would be good in a bear market enviroment if you wish to position yourself long.
QID, and QLD are also good examples of double inverses if you like to go long on under bearish conditions.
Be careful measuring your risk reward and limiting your exposure on the doubles.
Take Care.
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