Trading Leverage ETF

I find it difficult to trade options now. The stocks are just moving up slowly. This is a disadvantage because of the time factor for options. That is why I have decided to play leveraged ETFs such as the Direxion 3xs. This way, I still have the leverage but without time constraint.

I guess that options are more suitable for a bear market than a bull market.

Sector Indexes

Everything sector is very bullish now:

USA	Monthly	Weekly	Daily
S&P500	Up (+)	Up	Up
DJI	Up (+)	Up	Up
NasdaqComp	Up	Up	Up
DJ Transport	Up (+)	Up	Up
DJ Utility	Down (-)	Up	Up
Russell 2000	Up (+)	Up	Up
AMEX Airline	Up (+)	Up	Up
AMEX Biotech	Up	Up	Up
AMEX Gold Bugs	Up	Up	Up
AMEX Natural Gas	Up (+)	Up	Up
AMEX Oil	Down	Up (+)	Up
AMEX Security Broker	Up	Up	Up
AMEX Telco	Up	Up	Up
KBW Bank	Down	Up	Up
KBW Insurance	Up (+)	Up	Up
PHLX Housing	Up (+)	Up	Up
PHLX Semiconductor	Up	Up	Up
S&P Retail	Up	Up	Up

Based on daily charts, it is overbought, so I expect some pullback and then go up higher since the weekly chart shows that there is some more to go.

Sector Indexes

Going down. But no strong sell signal except housing:

USA	Longterm	Midterm	Shorterm
S&P500	Down	Neutral	Down (-)
DJI	Down	Neutral	Down (-)
NasdaqComp	Up	Neutral (-)	Neutral
DJ Transport	Down	Neutral (-)	Down (-)
DJ Utility	Down	Up	Neutral
Russell 2000	Down	Neutral (-)	Down (-)
AMEX Airline	Down	Neutral	Neutral
AMEX Biotech	Neutral (-)	Neutral (-)	Neutral
AMEX Gold Bugs	Up	Neutral	Down (-)
AMEX Natural Gas	Down	Neutral	Down
AMEX Oil	Down	Down	Down
AMEX Security Broker	Up	Neutral (-)	Down (-)
AMEX Telco	Up	Neutral (-)	Down (-)
KBW Bank	Down	Down (-)	Down (-)
KBW Insurance	Down	Neutral	Down (-)
PHLX Housing	Down	Down	Down
PHLX Semiconductor	Up	Neutral (-)	Down (-)
S&P Retail	Up	Neutral	Down

Sector Indexes

Situation getting worse. Dead cat bounce may be over.

USA	Longterm	Midterm	Shorterm
S&P500	Down	Neutral (-)	Neutral
DJI	Down	Neutral (-)	Neutral
NasdaqComp	Up (+)	Up	Neutral (-)
DJ Transport	Down	Up	Neutral
DJ Utility	Down	Up	Neutral (-)
Russell 2000	Down	Up	Neutral
AMEX Airline	Down	Neutral	Neutral
AMEX Biotech	Up (+)	Up	Neutral (-)
AMEX Gold Bugs	Up	Neutral (-)	Neutral
AMEX Natural Gas	Down	Neutral	Down (-)
AMEX Oil	Down	Down	Down
AMEX Security Broker	Up (+)	Up	Neutral
AMEX Telco	Up	Up	Neutral
KBW Bank	Down	Neutral (-)	Neutral
KBW Insurance	Down	Neutral (-)	Neutral
PHLX Housing	Down	Down	Down
PHLX Semiconductor	Up	Up	Neutral
S&P Retail	Up	Neutral (-)	Down (-)

Sector Indexes

It seems that biotech is going up (due to swine flu?). Oil and gas is not working well while Nasdaq is heading up again.

USA	Longterm	Midterm	Shorterm
S&P500	Down	Up	Neutral
DJI	Down	Up	Neutral
NasdaqComp	Neutral	Up	Up (+)
DJ Transport	Down	Up	Neutral
DJ Utility	Down	Up (+)	Up
Russell 2000	Down	Up	Neutral
AMEX Airline	Down	Neutral	Neutral
AMEX Biotech	Neutral	Up	Up
AMEX Gold Bugs	Up	Up	Neutral
AMEX Natural Gas	Down (-)	Neutral (-)	Neutral
AMEX Oil	Down	Neutral (-)	Down (-)
AMEX Security Broker	Neutral	Up	Neutral
AMEX Telco	Up	Up	Neutral
KBW Bank	Down	Up	Neutral
KBW Insurance	Down	Up	Neutral
PHLX Housing	Down	Down	Down
PHLX Semiconductor	Up	Up	Neutral
S&P Retail	Up	Up	Neutral

Sector Indexes

Gold has moved, energy is moving now. The next one, I think will be transport (i.e. shipping).

USA	Longterm	Midterm	Shorterm
S&P500	Down	Up	Up (+)
DJ Industrial	Down	Up (+)	Up (+)
DJ Transport	Down	Neutral	Up (+)
DJ Utility	Down	Neutral (+)	Up (+)
Nasdaq Comp	Down	Up	Up (+)
Russell 2000	Down	Up	Up (+)
AMEX Airline	Down	Down	Down (-)
AMEX Biotech	Down	Neutral (+)	Up (+)
AMEX Gold Bugs	Up (+)	Up	Up
AMEX Natural Gas	Down	Up	Up (+)
AMEX Oil	Down	Up (+)	Up (+)
AMEX Security Broker	Down	Up	Up
AMEX Telco	Up (+)	Up	Up (+)
KBW Bank	Down	Up (+)	Up (+)
KBW Insurance	Down	Up	Up
PHLX Housing	Down	Neutral	Neutral
PHLX Semiconductor	Up (+)	Up	Up
S&P Retail	Up	Up	Neutral

Supercharged ETFs

How much risk are you willing to take?

Do you know that there is a group of ETFs that is designed to return you 3x than the normal underlying stocks? This means that for a 1% increase in the underlying stock, your ETF will rise 3%. The reverse will also be true. So, 3X ETF is not for the faint heart. But if you can time properly your entry, you will surely be rewarded.

You can search finance.yahoo.com for the ETFs that I'm talking about:

TYO	Direxion Daily 10 Yr Trsy Bear 3X Shares	66.42	ETF		PCX
TYD	Direxion Daily 10 Yr Trsy Bull 3X Shares	54.09	ETF		PCX
TMV	Direxion Daily 30 Yr Trsy Bear 3X Shares	76.55	ETF		PCX
TMF	Direxion Daily 30 Yr Trsy Bull 3X Shares	45.40	ETF		PCX
DPK	Direxion Daily Devlpd Mrkts Bear 3X Shrs	36.68	ETF		PCX
DZK	Direxion Daily Devlpd Mrkts Bull 3X Shrs	48.08	ETF		PCX
EDZ	Direxion Daily Emrg Mrkts Bear 3X Shares	16.20	ETF		PCX
EDC	Direxion Daily Emrg Mrkts Bull 3X Shares	78.54	ETF		PCX
ERY	Direxion Daily Energy Bear 3X Shares	22.25	ETF		PCX
ERX	Direxion Daily Energy Bull 3X Shares	32.59	ETF		PCX
FAZ	Direxion Daily Financial Bear 3X Shares	4.82	ETF		PCX
FAS	Direxion Daily Financial Bull 3X Shares	10.31	ETF		PCX
BGZ	Direxion Daily Large Cap Bear 3X Shares	38.08	ETF		PCX
BGU	Direxion Daily Large Cap Bull 3X Shares	33.11	ETF		PCX
MWN	Direxion Daily Mid Cap Bear 3X Shares	33.53	ETF		PCX
TZA	Direxion Daily Small Cap Bear 3X Shares	26.80	ETF		PCX
TNA	Direxion Daily Small Cap Bull 3X Shares	25.99	ETF		PCX
TYP	Direxion Daily Technology Bear 3X Shares	27.57	ETF		PCX
TYH	Direxion Daily Technology Bull 3X Shares	73.24	ETF		PCX

You can see that you can take a bullish or bearish stand and the ETF will try to gives you a return of 3x.

Currently, I'm bullish. This rally is all about liquidity and hope. I'm stalking the following: FAS, TNA and TYH.

Weekly Analysis

Short squeeze over? Market still looks weak. The next move is to consolidate. This will take 1-2 weeks. Current charts do not indicate a possible panic move yet.

USA	Longterm	Midterm	Shorterm
S&P500	Down	Up	Neutral (-)
DJI	Down	Neutral	Neutral (-)
Nasdaq Comp	Down	Up	Neutral (-)
Russell 2000	Down	Up	Neutral (-)
AMEX Airline	Down	Neutral	Neutral (-)
AMEX Biotech	Down	Down (-)	Down (-)
AMEX Natural Gas	Down	Up	Neutral (-)
AMEX Oil	Down	Neutral	Neutral (-)
AMEX Security Broker	Down	Up	Neutral (-)
AMEX Telco	Down (-)	Up	Neutral (-)
KBW Bank	Down	Neutral	Neutral (-)
KBW Insurance	Down	Up	Neutral (-)
PHLX Housing	Down	Up	Neutral
PHLX Semiconductor	Down	Up	Neutral (-)
S&P Retail	Up	Up	Neutral

Nationalization Speculation Week

Everything is pointing down except biotech:

USA	Longterm	Midterm	Shorterm
S&P500	Down	Down	Down
DJI	Down	Down	Down
Nasdaq Comp	Down	Down	Down (-)
Russell 2000	Down	Down	Down
AMEX Airline	Down	Down	Down
AMEX Biotech	Down	Neutral	Neutral (-)
AMEX Natural Gas	Down	Down (-)	Down (-)
AMEX Oil	Down	Down (-)	Down (-)
AMEX Security Broker	Down	Down (-)	Down (-)
KBW Bank	Down	Down	Down
KBW Insurance	Down	Down	Down
PHLX Housing	Down	Down	Down
PHLX Semiconductor	Down	Down (-)	Down (-)
S&P Retail	Down	Down	Down

Not many counters left that is high enough to allow me to play the options. I will be looking for some retail counters this weekend. So, when will the US government nationalize Citibank and Bank of America? The speculation sure has beaten the financials. I am wondering how low will they go?

January 2009 Performance

After a few months of hot performance, I'm hit with a nuclear winter for January 2009. Kaboom! I guess that regression to the mean is in effect. It is a totally disastrous month for me. This will definitely hit my confidence badly. Time to reduce trade.

The following options all expired worthless:
XOM put, V put, AGU call, GLD put, STI put (the expected action was late by 1 week after expiration!), CELG put, BIIB put, CVX put, GENZ put, MMM put.

I have large position in oil and biotech sectors. These two sectors goes up instead. That explains the large hit. The lesson learned is not to overtrade and not to overweight too much on a sector.

December 08 Performance

Not a good month for me. My hot streak has cooled down and may take a turn for the worse next month. Positions that has been closed in the month of Dec 08 are:

• CB 09 Jan Put (-): Cut loss.
  
• ACE 09 Jan Put (+): Got out of the position to protect capital. Barely break even.
• DSX 08 Dec Call (---): Expires worthless.
  
• TXT 08 Dec Call (---): Expires worthless.

So, my rebound play with calls didn't work at all due to bad timing. I think I will stick to playing the weekly trend direction.

Weekly Analysis

No strong trend detected, movement is pretty much sideways:

USA	Longterm	Midterm	Shorterm
S&P500	Down	Down	Neutral
DJI	Down	Down	Neutral
Nasdaq Comp	Down	Down	Neutral
Russell 2000	Down	Down	Neutral
AMEX Natural Gas	Down	Down	Neutral (+)
AMEX Oil	Down	Down	Neutral (+)
AMEX Security Broker	Down	Down	Neutral
KBW Bank	Down	Down	Down (-)
KBW Insurance	Down	Down	Neutral
PHLX Housing	Down	Down	Neutral
PHLX Shipping	Down	Down	Neutral (+)
S&P Retail	Down	Down	Neutral
AMEX Biotech	Down	Down	Neutral
AMEX Airline	Down	Neutral	Neutral

November 08 Performance

The reversal from 21 Nov 08 really hit me hard. It erases a big chunk of my open profit. My close positions for this month are:
BYI 09 Jan Put (6+): Close out as it seems that it will stay within the downtrend channel.
CMA 09 Jan Put (1+): Got out of this together with JPM.
GME 09 Jan Put (+/--): Just breaking even with this one. Got nervous with my positions as it rebounds.
JPM 09 Jan Put (3+): Just barely managed to get out with a smaller profit.
MDC 09 Jan Put (--/--): Got two positions but didn't take profit. The rebound was strong. Decided that this is a hard one to play, so cut my losses.
SYK 09 Jan Put (10+/2+): This stock gave me a good profit. Set a new record based on percentage. Close the position as it is very oversold on all time frame.
USB 09 Jan Put (+): Strong rebound, so decided to close this up.

Overall, I'm satisfied with my November 08 performance. Just too bad that I didn't take profit on most of my position.

Looks like I'm heading into a bad December. Most of my puts are not working and I'm scaling down my positions. Biotech and oil themes are not working as I like. My luck may be running out. Time to conserve my capital.

Holidays!

Ok, I must remember the long holidays. Since I'm not living in the US, I am not familiar with the holidays. I got a good position last week, but everything changes from Friday onwards. With the coming Thanksgiving holiday, the bulls have manage to push up in low volume. Mind you, the changes to my options value is substantial with this low volume push up. It is no fun to see double digits gains being reduce into nothing. Next time, I will remember this sort of things happen during long holidays.

Underestimating the down strength

I always underestimate the strength for a particular move. It's never perfect for me in managing my trades. I'm currently having a light position to the downside. How low will it go before a rebound? I think that this next downside move will not be so strong as compared with the one in early October. The ratings for various sectors remains:

USA	Longterm	Midterm	Shorterm
S&P500	Down	Down	Down
DJI	Down	Down	Down
Nasdaq Comp	Down	Down	Down
AMEX Natural Gas	Down	Down	Down
AMEX Oil	Down	Down	Down
AMEX Security Broker	Down	Down	Down
KBW Bank	Down	Down	Down
KBW Insurance	Down	Down	Down
PHLX Housing	Down	Down	Down
PHLX Shipping	Down	Down	Down
Sig Steel	Down	Down	Down
S&P Retail	Down	Down	Down
AMEX Biotech	Down	Down	Down
AMEX Airline	Down	Down	Neutral

Rollercoaster Week

Up and down, up and down. What a week. The market looks like it has stabilized a bit. Most blogs are calling for the bottom and a rebound towards the end of the year. I think that we should have one more leg down before any meaningful rebound will happen. Why? The banks looks more vulnerable now and I think that the next sell down will be led by the banks.

The reading for various US sectors are:

USA	Longterm	Midterm	Shorterm
S&P500	Down	Down	Down
DJI	Down	Down	Down
Nasdaq Comp	Down	Down	Down
AMEX Natural Gas	Down	Down	Down
AMEX Oil	Down	Down	Down
AMEX Security Broker	Down	Down	Down
KBW Bank	Down	Down	Down
KBW Insurance	Down	Down	Down
PHLX Housing	Down	Down	Down
PHLX Shipping	Down	Down	Down
Sig Steel	Down	Down	Down
S&P Retail	Down	Down	Down
AMEX Biotech	Down	Down	Down
AMEX Airline	Down	Down	Neutral (+)

Meltdown Week

What a crazy week. Everything is down now:

USA	Longterm	Midterm	Shorterm
S&P500	Down	Down	Down
DJI	Down	Down	Down
Nasdaq Comp	Down	Down	Down
AMEX Natural Gas	Down	Down	Down
AMEX Oil	Down	Down	Down
AMEX Security Broker	Down	Down	Down
KBW Bank	Down	Down (-)	Down (-)
KBW Insurance	Down	Down	Down
PHLX Housing	Down	Down (-)	Down (-)
PHLX Shipping	Down	Down	Down
Sig Steel	Down	Down	Down
S&P Retail	Down	Down	Down
AMEX Biotech	Down (-)	Down (-)	Down
AMEX Airline	Down	Down (-)	Down

I was selling my put options from Monday to Friday. I didn't manage to earn a lot because many of my options are expiring this month and I just sold them when I break even or near break even. Too bad I got the direction right but not the time. Anyway, who can imagine the ferocity of the selling?

I have gotten out 2/3 of my put options by last Friday. I'm looking for a rebound now. If you go around the blogs, a lot of traders are looking for a rebound too. Hopefully I can reload my put options with this rebound.