Financial history doesn't repeat itself, but it often rhymes. You can't be stupid enough to trade off anything I say.... I'm lucky they let me out of the straight-jacket long enough to trade.

J. P. Morgan

"Sell down to your sleeping point"

Thursday, March 26, 2009

Quick Thoughts

We have a pullback coming.
pre earnings
pre NFP
Post quarter

There will probably be some game theory on timing it..

It's tough with Quarter end and NFP being so close together.

I would doubt the peak will be on the first..
But a little boost into the weekend, get the weekend warrior crowd to pick them up on Monday trade....


Tony said...

Here's an interesting post on something I thought about recently: shorting both FAS and FAZ.

It seems counter intuitive but I do not have the math skills to think about it numerically, but it did occur to me last week.

Notice that they are both lower than they were last month. On Feb 9th, FAS was 11 and FAZ was 39, now they are respectively 6.5 and 20. The other 3X ETF's have more closely approximated inverse relationships.

Having shorted both would have garnered considerable profit. I know there is a catch, I just can't figure it out.

Eric said...

there are some interesting ideas out there.

I'll be some quant has put in some thoughts about it...

but the with the tracking error. some have the thesis that you go short on both... and they are both headed to Zero.

Eric said...

that is the same reason I'm suspect of the ETF's they have tracking errors too.

Tony said...

Is it possible to get burned doing that? Sure you could tie up capital-- opportunity cost-- but I would guess the worst you could do is break even.

Eric said...

seems like something like that is headed to, some kind of disaster.

All this stuff it hard enough, without trying to get caught up in the derivative gaming.

It just sounds like more pain in the ass that I am willing to take on.

But shit just limit your risk... try it with 5 shares or 15 and see how it goes.

Tony said...

That stuff is not my style, I usually avoid the gimmicky stuff. I thought I'd tap your math brain to see if I was missing something.

I like the game theory idea, btw. QQQQ looks like a developing inverted H/S, but needs to pull back to form the right shoulder. T.Lo seems to be implying that semi's have hit a sentiment resistance. I took profits in CY.

Eric said...

I think the tracking error is just proshares "taking profits" every day.

I think that is the drain on those trading vehicles. they are doing a ton of things to hide it.

Who knows if it's illegal or not for them to be messing with it. should be.

Derivatives of all type just kill me. as I look around and see how people are looking for a little edge here or there.

I want to own stock, and I want it to go up... and then you have the companies diluting you with options or with their own "gaming" shareholders..
I want better shareholder rights out of this. I told you how poor the proxy was for WFC, the worst I've ever seen. Hidden in the report, like you didn't need to read it. and should just go along with the board... they have my back RIGHT?

Eric said...

That convoluted shit they write some times.... LOL

If I don't clearly see the trade, I just refuse to play.

My best suspicion is that we will pull back through like next Thursday.

then maybe sideways into earnings, and see how they are.

but ultimately we will see 9k and maybe 10k

Eric said...

One of these days I'm going to spell check... Firefox has a rudimentary spell checker and it's always failing my illiterate ass.

Even worse is that word self corrects now.... WTF with that...

damn enabling computer devices.

Tony said...

I just thouight you did it as a literary device in order to make a point. :D

Eric said...

I do it because I'm on a 13 on a 1-10 scale of fatigue.

and effectively a monkey banging on a keyboard half the time.

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