Exit SDS and TLT with a market order

I am going to post exits on SDS and TLT. The current price of SDS is 34.69 and TLT is at 92.10, both for modest gains (34.11 and 89.26 entries).

Seeing as I am looking for an intermediate term trade entry on the indexes, I considered "rolling" SDS over to that column, but I will leave that up to any one else on their own. A stop could go either at breakeven and hope for the best, or place it corresponding to the recent market highs.

Anyway, I will try to stay patient and see either some support broken or a bounce to a lower high, before taking a new trade.

SDS Trade Exit and QLD Limit Order

This morning the sell limit order of 106.00 was hit for SDS resulting in a 12.6% gain on this blog trade. In actuality, it would have been impossible for anyone to get in at as bad a price (94.15) as the price I posted so anyone who traded it probably got in closer to 92.00 or 93.00 which is even better. Also, 106.00 was the approximate level SDS was trading at today when the short-term model first hit oversold, which means we got out at a reasonable price.

For now, I want to focus on getting into a bullish trade at a good price without too much drawdown. The Nasdaq has clearly held up better since last November than the Dow or the S&P and I don't see any good reason at this point to expect that will change on any move up from these levels, so the fund I will suggest is QLD, which is the Nasdaq ultra/2x ETF. From looking at several different factors, I think there is likely to be a few more percent down before a major reversal so I am going to suggest using a limit order to try to enter QLD on further weakness even though the short-term model is already oversold and justifies an entry.


So here is the next trading recommendation.....

Place GTC limit orders to buy QLD at 19.72 unless/until further notice is given.


Pete

New SDS Trade

This post will be brief because I am not feeling well. (Also if you got two of this post, this one is correct. I had mistakenly typed the wrong price of SDS in the prior post.)

The short-term model for the S&P is overbought as of this morning (due to yesterday's action). I think the probability is high that the Nov lows will be taken out (maybe significantly) before the market can make a solid rebound. With that said.....


Recommendation:

Buy SDS today with a "market" order. The current price is 94.15 which I will use for the blog entry price.


Pete

SDS Trade Exit

The short-term models are now oversold with today's large decline. So I am using the current price of SDS, which is 79.40, for the blog exit price. That is a nice return of 8.5% since yesterday!

I recommend exiting SDS today before the close if possible, or by using a "market" order to sell it tomorrow if unable to exit today.

There are no changes to the BGZ trade as of yet.


Pete

SDS Trade Update

The opening price of SDS yesterday was 73.18, which I will use for blog calculation purposes. From a trading standpoint, with this morning's sharp decline, it would make sense to place a stop loss at breakeven or slightly better. I will suggest an exit when the short-term model becomes oversold.

As a side note and market analysis lesson.......

This morning's price decline looks like it may get even more severe. When markets are range bound and trading with relatively low volatility, new directional moves typically start with explosive price moves. So if we see a decline larger than any day in recent weeks (say 5% or more), then that would be additional evidence that the market is indeed breaking down and very likely to fail on this rally attempt.

Once I feel that we are "in the clear" as far as a failed market rally, I will post a suggested protective stop loss for the BGZ trade. No changes yet, though.

Pete

New SDS Trade

As per Friday's post, I had decided to wait until this morning to suggest a new short-term inverse ETF trade. Based off the failed rallies in this bear market, I had noted that I would prefer to see the Jan 28th highs not be exceeded, especially on a closing basis. This morning shows a significant gap down indicated and is consistent with the pattern in other failed rallies during May and Sept '08.


So I am going to track a short-term trade on the blog from this morning's open. For anyone already in the current BGZ trade, this trade does not need to be entered, but could be viewed as a completely separate trade. The time frame of this trade would typically be around 1 week.


Recommendation for those interested.....


Buy SDS at today's (Monday) open with a market order. I will use the opening price today for % return calculations.


Pete