Stenzrob's specials

[stenzrob]

Karma has a way of revealing itself in occasionally humorous irony

touche, peanuts!

[stenzrob]

Bad news in housing well received by my QID ultrashort position. This could still payoff. In the meantime, I took a long position in DRAX last Thursday 3/22 at $6.18. It's in the green right now, and has been upgraded and/or had price targets raised by two analysts since then after their analyst and investor day that day.

These are my only positions right now.

Sold the DRAX for $6.28 for a negligible gain.
I'll see if I can pick it up cheaper on a pullback.

[stenzrob]

Ultrashort ETF's underperforming

I've been following QID and SDS, ultrashort ETF's for nasdaq 100 and S&P 500. They did not perform as well today as they should have, and I noticed that there was about a 0.5% jump in both of these at a time when there was no correlating jump in the indexes that they (inversely) track, right at the beginning of the day. Here are two day one-minute charts.

Over two days, the nasdaq has fallen about 0.6%, but the QID is not anywhere near +1.2%, in fact it's down. There's a funny blip there between yesterday and today, but what really killed the short term performance of QID is that the nasdaq dropped about 0.25% right at the open, and QID just picked up from where it finished yesterday, which was down 0.75% while the nasdaq was flat for the day. SO, my QID dropped when the nasdaq was flat, and way underperformed what it's supposed to do today with the nasdaq down.


Likewise, over two days, the S&P500 is down about 0.5%, but SDS is not anywhere near +1.0%.


Of course, the prospectus says that the use of derivatives, increased volatility, blah, blah, blah, => we don't guarantee anything. But still, I'm a little disappointed that a pretty bad day in the markets doesn't get me the gains it should in these ETF's.

I wouldn't pay this much attention to them if I didn't have a position, so it's been an interesting experiment in inverse market timing, but I probably won't be doing this again.

[riverbabe]

Qid

I knew I read something about QID today, so went back and found it:

"The ProShares Ultra Short QQQ (QID - commentary - Cramer's Take) trades inversely to the Nasdaq 100 (NDX) on a 2:1 ratio. This ETF has been trading in a sideways channel from late November through February. But the late-February breakout did not follow through. Instead, it fell back into the trading channel. However, the last couple of days of strength might mark the end of the pullback. If you're long, try setting a tight stop on this."

[stenzrob]

Thanks river. I'm really not sure what to read into volume variations in this, since as I understand it, the performance is supposed to be independent of activity in the shares. Rather than watch technicals for the ETF itself, I think it's better to study the technicals for the index it (inverely) tracks while standing on my head. Or, while doing this:

By the way, this is not me - my chest is hairier but less lumpy.

[IIC]

My take:

The Ultra's such as QLD and QID "Attempt" to match 2x the Naz 100 using sophisticated methods that I never bothered to try to figure out...But and this is a BIG but...Unlike the Naz 100 which merely reflects a weighted move of all the 100 stocks, the real mover on these types have to do with supply and demand of the ETF's themselves...Sentiment can play a part in interest either way on these.

Take a look at the Ultra ETF's that have not developed much volume yet...they can be way off.

And actually I have seen many times intraday where both the QLD and QID are both red or green.

I believe that if all goes well at Proshares you will see that the QID and QLD will be real close to 2x over the intermediate and longer terms.

Take a look at this chart...looks pretty close to me:

[IIC]

Unfortunately...I'm real busy right now, but I took a quick comparison view of the charts from July 17th through today:

Naz 100 +21%

QID -31%

QLD +32%

So, it appears that the movement has only been 1.5x instead of the targeted 2x. However, I believe the charts I was looking at do not take into account the $5.00+ QLD distribution made in December...If they don't then QLD is actually up closer to 40%.

[stenzrob]

Unfortunately...I'm real busy right now, but I took a quick comparison view of the charts from July 17th through today:

Naz 100 +21%

QID -31%

QLD +32%

So, it appears that the movement has only been 1.5x instead of the targeted 2x. However, I believe the charts I was looking at do not take into account the $5.00+ QLD distribution made in December...If they don't then QLD is actually up closer to 40%.

I'm seeing about 1.5X over that time period as well.

I'm curious, though, about what you said earlier that "the real mover on these types have to do with supply and demand of the ETF's themselves". Are you saying that if there is demand for QID, for example, this will force up the price of QID, regardless of whether the index that it's designed to mirror moves?

[IIC]

I'm seeing about 1.5X over that time period as well.

I'm curious, though, about what you said earlier that "the real mover on these types have to do with supply and demand of the ETF's themselves". Are you saying that if there is demand for QID, for example, this will force up the price of QID, regardless of whether the index that it's designed to mirror moves?

Yes...exactly...if nobody wants to buy the shares then the price either goes down or if the sellers won't budge, it doesn't trade. Mirroring is only a goal. Same thing for the Q's themselves, although the Q's fund is much simpler...I've seen the Q's green and the Naz 100 red or vice-versa periodically but over the long run they are very close.

Let's take The RUT and its ETF (non-ultra) tracker, IWM. Today the RUT was down .81% but IWM was only down .49%. Over 3 years the RUT is up a little more %-wise than IWM. Happens a lot...especially when you see the bid/ask on a lo vol ETF like SDD...and they are not close to the last trade...sometimes you have a rather long wait.

As far as me...I've only been trading QLD and QID since October...have not traded the other Ultras but I watch some of 'em.

[IIC]

Right now QID is 3x the inverse NDX ...Could sentiment be negative?

[peanuts]

I mistakenly thought you were once an owner of some FTK stock, so that's why I brought it up. It was the ticker resemblance to FTEK that got me. It might be rolling over, or might be breaking out to new highs. I guess time will tell.

It's not a bad company, though. I do own a few shares that I picked up recently. I'm thinking of switching the funds to DWSN if the breakout doesn't happen with FTK. But even if it does, I wouldn't mind owning some DWSN on a bigger pullback, either.

Hey Stenz,

Two winnas in one post! How's that for luck?

My TA view on FTEK looks like this is a great place for an entry at $22:

[peanuts]

didja get the FTEK at $22?

I see FTK is exploding today, and DWSN is hanging in there as well.

[stenzrob]

My adventure in the inverse fund was interesting. I was short the market during one of the best few months of all time. Bailed out of that a little while ago and have been dabbling in a few small companies.

I bought some AEIS this morning. Had owned this earlier, and sold at a slight loss to buy the QID inverse index after 2/27 when it looked like the china syndrome would cause a meltdown.

Just before noon today, there was a Forbes article posted that mentions AEIS.

http://www.forbes.com/2007/06/01/movil-transocean-energy-pf-ii-in_mr_0601watch_inl.html?partner=yahootix

"Richard Moroney, editor of Dow Theory Forecasts, says that if you want to beat the market for the rest of 2007, Advanced Energy Industries (nasdaq: AEIS - news - people ) is his favorite pick. Advanced Energy has got a hand in several tech trends. The Fort Collins, Colo., company's power conversion and control systems wire flat-panel displays, solar cells and semiconductors. Analysts are looking for 20.3% annual long-term earnings growth, and Advanced Energy stock trades for just 12.4 times trailing earnings.

"He says a key profit driver is that the company's been lowering costs by moving its production to China; it recently announced that it would shutter a German facility to shift even more to the Far East. Moroney, who picks investments with a proprietary "Quadrix" system that ranks stocks based on growth, value and momentum, also notes that the company trades at a 12% discount on forward earnings to the rest of the semiconductor industry. "

[stenzrob]

Just bought some VDSI again, also, at $23.09.
It seems to be breaking out yet again.

[stenzrob]

Bought some BLUD as it started to move this morning, then saw that the FDA approved their new device.

Also bought into SCLD again. Their last quarters report showed on track with turnaround plan under new management, and today they announced a new secure server for blackberry mail. At current prices, it's selling for less than revenue.