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DXD or SDS

newguy87 said: "Got in to DXD (Dow ultrashort) today below 53. S&P and Dow look to be a resistance levels and I'm not sure how much further legs this rally has in it. It has come up here before and broken down in the recent past and I'm thinking for another possible breakdown but maybe not as strong to the downside. Who knows it may run some more but I don't think it will be significantly more and if it is I'm willing to add to my position. Same rationale for SDS (S&P ultrashort) can be used but I chose chose the Dow. Any thoughts?"

StockMan69 said: "So what exact bet are you making? I will have to research the "Ultrashort" because I dont know much about it."

newguy87 said: "I'm making the bet that the markets have hit a plateau and will head back down. I could be wrong and the market may run more but then I'll be willing to add to my position if that's the case. I'm shorting the Dow but I think the S&P could be shorted too if an investor wanted. Basically DXD, SDS are ultrashort etfs of the Dow 30, S&P 500 indices. QID is the ultrashort etf for the Nasdaq. DOG, SH, PSQ I think are the short etfs for those same indices. Ultrashort etfs give you returns on a 2:1 ratio of the index you're tracking on a daily basis. For example: DXD say the Dow goes up 3% in a day then I'd be down 6% or conversely say the Dow went down 2% I'd be up 4%. Mind you these etfs don't always track these ratios perfectly but they do a fairly decent job of it. The short etfs do the same thing for the corresponding indices but on a 1:1 ratio instead. The market has been doing rather well in recent times in the face of quite a bit of bad news but I'm not sure how much longer that's gonna last. Even if we rally more from here I don't think they'll be much conviction behind it to sustain it. Who knows maybe the financials will report better than expected numbers as a catalyst. If that does happen I think it will be more of a short term boost without longer term sustainablity. I'm not saying we're gonna make new lows cause I think that the 1270 area is gonna provide strong support for the near term atleast. I do think we could go back to the low 1300s or high 1200s. In between here and there I think we could even get to low/mid 1400s but then we'll fade back down and I'll probably look to add at that time (in the 1400s I mean). We'll see only time will tell. :)"

EatMyShorts said: "I've been thinking about doing the same. I haven't pulled the trigger on SDS or DXD yet, but there's no chance I would go long right now. Looking at individual charts, there are very few good buys out there. If the Dow reaches 13,500 any time this month, I'm shorting every share I can afford. I'm currently short DSL. I've found that it performs bad regardless of the market. Ha."

Lagg-Alot said: "I traded DXD and DDM a lot last year only to find out they manipulate the hell out of the DOW (easy for the Plunge Protection Team to BUY it up just before the close everyday or at end of week) just so they can claim "Only a %3 loss for the week on the DOW". Notice the Up trends last 2 to 3 times longer then the down trends? Stay in DXD, SDS with a stop at the last HIGH. We may be going down for another leg. As earnings SUCK and if we get one company that reports strong that would be a miraculous."

StockMan69 said: "Thanks for the explanation. I think your plan sounds pretty good."

newguy87 said: "TWM I think is for the russell 2000 and one that I think is pretty good too, although I'm not quite as sure of the reaction with small caps included. I think SKF short for the financials is also a pretty popular one in recent times as well. I'm not as savvy with those so I stick with the major indices. I've read about the plunge protection team and wondered if it exists. I kind of lean on the side that it does but think that in the end they can't stop the decline if it's gonna happen but just make it a little more orderly rather than a panic sell off. Thanks for the input guys. :)"

newguy87 said: "Well I'm bringing this thread back from the past just to ask some opinions. I bought this etf because I felt the markets were gonna come down at the time and as a hedge for any long positions I had. Subsequently, I bought some more when the indices were approaching their 200 MA which put DXD in the 49s. Now I'm thinking of selling half my position since it has had a nice run. Mind you this doesn't mean I'm bullish, frankly I think the markets will probably retest their March lows and go even lower. If I'm right I'll still have a position and if I'm wrong I've taken some profits. Just wondering where some of you think the markets are headed from here. Thanks. :)"

prohobo said: "The problem with the shorts and ultrashorts is that they are ALSO driven by supply and demand. Look at the spread action - they do NOT follow the market. It is the same problem with the NDX/MNX cash vs. QQQQ spread. That arb may NEVER close because of the volume driving one-side. If the product NEVER converts it means it may NEVER converge!"

newguy87 said: "Yes I said that these ETFs don't always track exactly on a 1:1 ratio or 2:1 ratio but generally they do move the way they're suppose to. Also the ratios are suppose to be true on a daily basis maybe not as much for a long term view. I'll use an example of around when I bought the 2nd time. Dow was around 13100 now it's around 11800 about a 1300 down move or ~10% down. At that time DXD was around 49 or so now it's 59 about 10 dollars up or ~20% move up. So it actually did a good job of tracking what it was suppose to (2:1 inverse ratio) even on a longer term basis. Regardless I sold 1/2 my position today just above 60, so it's moot now. I think they're may be a short intermediate rally sometime soon but longer term I still think the market has to retest the march lows and quite possibly lower, so I have my other 1/2 for that. If I'm wrong atleast I've taken some profit. Thanks for the input. :)"

prohobo said: "[QUOTE=newguy87;70565]Yes I said that these ETFs don't always track exactly on a 1:1 ratio or 2:1 ratio but generally they do move the way they're suppose to. Also the ratios are suppose to be true on a daily basis maybe not as much for a long term view. I'll use an example of around when I bought the 2nd time. Dow was around 13100 now it's around 11800 about a 1300 down move or ~10% down. At that time DXD was around 49 or so now it's 59 about 10 dollars up or ~20% move up. So it actually did a good job of tracking what it was suppose to (2:1 inverse ratio) even on a longer term basis. Regardless I sold 1/2 my position today just above 60, so it's moot now. I think they're may be a short intermediate rally sometime soon but longer term I still think the market has to retest the march lows and quite possibly lower, so I have my other 1/2 for that. If I'm wrong atleast I've taken some profit. Thanks for the input. :)[/QUOTE] I haven't done it, but it would be interesting to see the ratio tracking between the DOG and DXD. I wonder which performed better (as to the ratio)?"