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Friday, May 1, 2009

SRS

Its kind of weird, I haven't paid too much attention to the bearish ETF's (except FAZ) even during April's sideway's skid then up burst at the end. But I am peeking at them now. They are starting to look very nibblish at least for the near term. Of course they looked nibblish weeks ago too and you could have lost a fortune on these things. But I have not been pumping them during this P2 rally.

SRS has gotten absolutely crushed. I think it peaked in an overreaction to how bad things were. Now it may be correcting on an overreaction to the low side. Somewhere in between lies the truth. Lots of traders are obviously betting that the real estate and housing downturn must be in a "bottoming" process. And since real estate was the last bubble, its a quick draw of capital back into it. I think its likely bubbling a bit again from a stock standpoint.

If not, then maybe the PPT is just buying it all which in fact they are in a sense and they mean to pump it. But of course they do.

But back to SRS. I think, looking at the whole of things, one is taking more risk shorting SRS at this point rather than buying it especially considering its long term MACD positive divergence should eventually pay off in some form or another for SRS buyers. Question is, is this a near term bottom?

Got to dip your feet back in sometime or another. Last I looked, The GOV doubled down on debt to keep the whole ball of wax from imploding. Indeed.

3 comments:

  1. Dan, does it mean that maybe SRS is at an interesting level for you to get your feet wet now? I jumped on gun a bit too early at low $26 level averaged some more at $23. Got stressed up when market kept marching upwards to 888, but did plan to add more srs if SPX goes over 900. I would really like to see SPX to go down at least to 820 or lower. Thanks so much for your diligence and studies to help out all of us here. It was a relief to see market finishes below 875 today. Hope to see much more down tomorrow! Once again, thank you very much for your good work.

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  2. imo, long URE is the better play, SRS will likely see single digits in may/june if SPX rallies above 900

    careful with SRS longs, cheers

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  3. SRS is 2x inverse of $DJUSRE, and $DJUSRE is showing positive divergence on its daily MACD as well. Hmmm...

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