Posted by canadianguy on 19th of Feb 2009 at 04:29 pm
i am wondering if any of you wise traders have a strategy for
layering into something that is getting killed. As I look at the
downtrend line on the weekly XLF it appears to me that it MAY
go as low as $6ish should bottom somewhere between 6 and 6.70. From
here that is about a 20-30% decline. That would bring UYG down to
$1.25-1.55ish. We all know that whatever point this bounces
for an interim bottom at some point, like in November, UYG
should double in a few days. Of course neither you nor I know
where this will be, but if we can agree $1.25 would be the lowest
it should go, and it should bounce from there to $2.50, how does
one go about layering into it at this point, especially considering
that it may be at a short term bottom right now?
So if one plans to buy $20,000 worth of it, perhaps buy 1000
shares starting around $2.20 and buying another 1000 shares each
time it goes down 10 cents, or is there a more intelligent way of
layering into it?
My problem with that is that while it COULD go to $1.25 it
probably won't. My guess is it probably bottoms around $1.80ish
which would not give you the position size you want.
Posted by junkmaylbox on 19th of Feb 2009 at 07:35 pm
I would start buying when RSI gets below 30 or we go below 750
on $SPX, whichever occurs earlier. I don't expect indexes to go
much lower than the November 21 lows, because this is a retest. We
might ever reverse tomorrow if the market gaps down and drops
really hard in the morning.
Another criterion that I would use is to compute the difference
between the MA(50) and the price. Any time the distance is above
27-30%, a reversal is imminent. Right now the distance is 17%. If
XLF is below 6 (currently MA(50)=9.03) , it would be a terrific
buying opportunity.
Posted by canadianguy on 19th of Feb 2009 at 11:02 pm
well i looked back at the october lows and in october the xlf
hit 12ish while the 50sma was over 20. That was 40% below the
50sma. The November low was 50 sma of 16 and the XLF was at 9 so
again 45% below. Right now I have the 50sma at 11ish so 55-60% of
that brings XLF to 6ish. That would bring UYG to 40% lower from
here, about $1.40.
Who knows if it gets there but if it does I think it would
warrant a good speculation with the expectation of 50% or more in a
couple of days..
For one thing I would look at spots like you're envisoning on
the XLF chart and see if you did better buying UYG or shorting the
same $$ amount of SKF -- I wouldn't be surprised if you do better
with the short. If you work up a study of it please let us know
what you find.
Personally, I try not to pick bottoms. Averaging losers is a
great way to lose money. My tactic would be to let the price do the
talking and once it has painted a tradeable bottom, go all in there
and then with a stop just below the low.
Yes, you miss the absolute bottom, but you get the meat of the
move at a much lower risk level.
'Losers average losers' is an old saying but it's very true in
my experience.
I never trade on what I think the market's going to do, only on
what it just did.
Posted by canadianguy on 19th of Feb 2009 at 04:43 pm
so Unsane, in the case of UYG here, looking back please tell me
which indicators you used to look back and buy. There have been a
few huge up moves in it, the best one in November 21. How would you
have known to buy that and not just watch it fake you out like it
had so many times prior?
3, and 2.7, thinking...it CANT GO LOWER, and it has only gone
lower...Im also long UYM at 12, rode it upto 17 and didnt sell, now
Im underwater. Sold FCX at 30.3 and rebought today...The good
news, we have until May at this rate of selling until we are
at ZERO! TWO MONTHS. My favorite long stock is QCOM and son
of a gun, i shorted it today, because it looks weak. Why dont
you call Barny Frank yourselves and pimp him...He is in his Newton
office this week, its listed, but he will ask you where you live
and you have to tell him some town in MASS to be able to talk to
him.
I have my mech systems. But basically I look for either an X%
move off a low (typically 4-8% for a 2x ETF) or a clear breach of
long term resistance.
I don't believe that any indicators or TA predict the future. At
all. Therefore there is no way to distinguish a breakout from
a fakeout ahead of time. Therefore you are inevitably going
to be faked out, probably more times than you catch a breakout.
Therefore the key is to (a) trade all the not-obviously-dumb
breakouts and (b) manage your risk very tightly with position sizes
and stops.
Why I'm against averaging losers is that it's a strategy that
depends on buying a stock in a downtrend. This means that you are
committing to losing money up front, and continuing to lose money
so long as the stock goes down. Either that, or at some point you
cry 'uncle' and eat the loss.
It's also very psychologically traumatic!
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uyg
Posted by canadianguy on 19th of Feb 2009 at 04:29 pm
i am wondering if any of you wise traders have a strategy for layering into something that is getting killed. As I look at the downtrend line on the weekly XLF it appears to me that it MAY go as low as $6ish should bottom somewhere between 6 and 6.70. From here that is about a 20-30% decline. That would bring UYG down to $1.25-1.55ish. We all know that whatever point this bounces for an interim bottom at some point, like in November, UYG should double in a few days. Of course neither you nor I know where this will be, but if we can agree $1.25 would be the lowest it should go, and it should bounce from there to $2.50, how does one go about layering into it at this point, especially considering that it may be at a short term bottom right now?
So if one plans to buy $20,000 worth of it, perhaps buy 1000 shares starting around $2.20 and buying another 1000 shares each time it goes down 10 cents, or is there a more intelligent way of layering into it?
My problem with that is that while it COULD go to $1.25 it probably won't. My guess is it probably bottoms around $1.80ish which would not give you the position size you want.
Any suggestions from the pros on this?
UYG
Posted by junkmaylbox on 19th of Feb 2009 at 07:35 pm
I would start buying when RSI gets below 30 or we go below 750 on $SPX, whichever occurs earlier. I don't expect indexes to go much lower than the November 21 lows, because this is a retest. We might ever reverse tomorrow if the market gaps down and drops really hard in the morning.
Another criterion that I would use is to compute the difference between the MA(50) and the price. Any time the distance is above 27-30%, a reversal is imminent. Right now the distance is 17%. If XLF is below 6 (currently MA(50)=9.03) , it would be a terrific buying opportunity.
For what it's worth.
well i looked back at
Posted by canadianguy on 19th of Feb 2009 at 11:02 pm
well i looked back at the october lows and in october the xlf hit 12ish while the 50sma was over 20. That was 40% below the 50sma. The November low was 50 sma of 16 and the XLF was at 9 so again 45% below. Right now I have the 50sma at 11ish so 55-60% of that brings XLF to 6ish. That would bring UYG to 40% lower from here, about $1.40.
Who knows if it gets there but if it does I think it would warrant a good speculation with the expectation of 50% or more in a couple of days..
UYG
Posted by junkmaylbox on 20th of Feb 2009 at 04:06 am
I have entered two large "stink bids" for UYG at 1.50 and URE at 2.05 this evening.
UYG-correction
Posted by junkmaylbox on 19th of Feb 2009 at 07:56 pm
I meant MA(20), not MA(50), and calculations are made for XLF, not for UYG.
For one thing I would
Posted by bkout3 on 19th of Feb 2009 at 04:41 pm
For one thing I would look at spots like you're envisoning on the XLF chart and see if you did better buying UYG or shorting the same $$ amount of SKF -- I wouldn't be surprised if you do better with the short. If you work up a study of it please let us know what you find.
Personally, I try not to
Posted by unsane on 19th of Feb 2009 at 04:38 pm
Personally, I try not to pick bottoms. Averaging losers is a great way to lose money. My tactic would be to let the price do the talking and once it has painted a tradeable bottom, go all in there and then with a stop just below the low.
Yes, you miss the absolute bottom, but you get the meat of the move at a much lower risk level.
'Losers average losers' is an old saying but it's very true in my experience.
I never trade on what I think the market's going to do, only on what it just did.
so Unsane, in the case
Posted by canadianguy on 19th of Feb 2009 at 04:43 pm
so Unsane, in the case of UYG here, looking back please tell me which indicators you used to look back and buy. There have been a few huge up moves in it, the best one in November 21. How would you have known to buy that and not just watch it fake you out like it had so many times prior?
thanks
Ive been long UYG since 4 and
Posted by delane on 19th of Feb 2009 at 05:28 pm
3, and 2.7, thinking...it CANT GO LOWER, and it has only gone lower...Im also long UYM at 12, rode it upto 17 and didnt sell, now Im underwater. Sold FCX at 30.3 and rebought today...The good news, we have until May at this rate of selling until we are at ZERO! TWO MONTHS. My favorite long stock is QCOM and son of a gun, i shorted it today, because it looks weak. Why dont you call Barny Frank yourselves and pimp him...He is in his Newton office this week, its listed, but he will ask you where you live and you have to tell him some town in MASS to be able to talk to him.
I have my mech systems.
Posted by unsane on 19th of Feb 2009 at 04:55 pm
I have my mech systems. But basically I look for either an X% move off a low (typically 4-8% for a 2x ETF) or a clear breach of long term resistance.
I don't believe that any indicators or TA predict the future. At all. Therefore there is no way to distinguish a breakout from a fakeout ahead of time. Therefore you are inevitably going to be faked out, probably more times than you catch a breakout. Therefore the key is to (a) trade all the not-obviously-dumb breakouts and (b) manage your risk very tightly with position sizes and stops.
Why I'm against averaging losers is that it's a strategy that depends on buying a stock in a downtrend. This means that you are committing to losing money up front, and continuing to lose money so long as the stock goes down. Either that, or at some point you cry 'uncle' and eat the loss.
It's also very psychologically traumatic!