Shorting $JNUG the Junior Miners ETF

What a year, huh?  A lot of volatility, crazy happenings around the election and overall a 10% gain in the SPY.  So, what did I do for myself?  Nothing good.  As with every year, I think I can trade my way to profits, and that hasn't worked.  Maybe it works for other people, but never has for me.


So, I am back to trying a sensible long term strategy.  This time, revisiting this strategy of shorting the leveraged ETFs.  I think I spread myself too thin last time, a lot of different ETFs, and trying to guess market direction, instead of using the daily rebalancing of the 3X ETFs in my favor.


So, I am now short $JNUG, the Junior miners 3X ETF.  I am offsetting this with a long position in $GDXJ, the single junior miners ETF.  I am using about a 2.6% ratio rather a flat 3.0 as would be indicated.  I'll let you know how it works. 


From my observation, $JNUG is one of the most volatile of the  #X ETFs, and is also available to short on occasion.  I got some.  We'll see how it works.


Thanks for reading, I'll let you know how it works out.

Leveraging the Home Builders

I shorted up two more leveraged 3X ETFs yesterday the Direxion Bull and Bear ETFs, $NAIL and $CLAW.   Like most of the things I trade, I have no idea if these are going up, down or sideways, I am in the trade for the decaying effects of daily rebalancing.

A word on these ETFs.  They aren't really the best idea from one standpoint, in that they are very illiquid and have pretty big bid and ask spreads.  If you move in out of them a lot, the spread will be very damaging.  Therefore, this really needs to be a long term play.

I hope to pretty much never cover this pair, and have them both decay to practically zero.  But I don't know if that will happen.  Life gets in the way sometimes.

I'm thinking of converting this strategy to a pay service through MarketFy.  Of course, it would be helpful to have some positive history.

Good luck and good trading.  The usual disclaimer applies.

A New Start

A few weeks ago I restarted the concept of the Leveraged ETF shortlist.   This time, instead of randomly picking assorted ETFs, I shorted pairs of opposite ETFs.  Things like $NUGT, which is a bull 3X Gold miners ETF, and it's opposite Bear ETF, $DUST.


I will say I was surprised that one day I was able to short $DUST, I hadn't been able to for a long while.  So when it was available, I grabbed it. 


So, as of today, I have 3 pairs, $DUST and $NUGT, $SQQQ and $TQQQ and $VXX and $XIV.  I don't want to have too many, because of the commission cost, but not too few because this strategy isn't flawless.


How can it fail?  If one of the ETFs in a pair falls too much.  I can explain this more some other time.  For now, just know that the best thing to happen is that the funds are volatile and fall equally over time.  As of now, all these pairs are winners.  We will see if that holds up. 


Happy trading.

Six Month Review

It's been a while since I posted here.  I had abandoned my strategy, but I wanted to go back and see what would have happened if I hadnt.  Here's a look at the stock price when I did my initial short many months ago and where it would be at Friday's close, adjusted for stock splits as appropriate.

As you can see from the table below, the strategy was pretty much a disaster  The negative impacts of the 3X leveraging were more than offset by declines in the market, particularly in the Russia and China markets  $NUGT was a huge winner, but most everything else did badly  I would probably need more time, or to include more bearish positions.

Close	Initial Short	Current Price
NUGT	9.60	2.85
BIS	29.13	35.73
TZA	9.42	14.18
VIXM	53.67	59.70
RUSS	32.68	48.59
CORN	22.99	21.08
FAZ	10.89	12.70
UVXY	36.25	42.81
FXP	28.22	51.87
XIV	47.34	20.43

A New Short Position

I added a new position this week, a small short position in $NAIL the Direxion Daily Homebuilders & Suppliers Bull 3X ETF.  That is, a leveraged ETF that seeks to triple the Daily performance of the homebuilders.index.  

I don't have any special insight into the homebuilders, but I think I have a pretty good idea of the long term performance of these specialty leveraged ETFs, which is lousy.  This one has only been in existence for a few months and is already down by 30% or so. 

It's pretty volatile and rarely traded.  The most difficult thing about it is finding somewhere you can short it, and I was lucky enough to find enough for a small short position.  

As always, the key to winning as a short with these funds it to hold the position other an extended period.  Buying and selling in a matter of days doesn't play to it's weakness as a daily rebalanced fund.  

Best of luck trading.  

I need Non-Correlated Assets

Whoo boy, what a day in the market, huh?  Tough for a long like me.  Yes, I am short ETFs, but they are inverse ETFs, so on a bummer of a day like this, I get slammed, and since they are leveraged, I really get slammed.  I did some trading to minimize the damage, but still some pretty steep losses.  

The concept was to have some funds that were not correlated with each other.  That is, I had a Russia, China, small caps, financials, biotech, oil and some others, so on other days, some were up and some were down.  Not today, everything got crushed, and my ETFs spiked.  Cost me a lot of money.

The point is, on a day like this, virtually everything is correlated.  So I either need to be more nimble, or buy some things that are inversely correlated, so that for sure I goes up while the other goes down.  I've tried that, and it works with these ETFs, but slowly.  I'll consider it again.

I sold a bunch of stuff, , including my $NUGT position.  Yyou can compare to a prior post to see the differences: The ETF Short List is a lot shorter tonight. I did keep the $UVXY, which got really hammered.  I saw it was the 11th highest spike in the $VIX since they have been keeping records.

	Close	Initial Short	Gain (Loss)	Percent
BIS	30.08	29.75	(0.33)	-1.1%
TZA	9.80	9.90	0.10	1.0%
VIXM	54.86	54.17	(0.69)	-1.3%
FAZ	11.76	11.26	(0.50)	-4.4%
UVXY	44.50	40.68	(3.82)	-9.4%

I covered $XIV Today

I covered my short on $XIV today, the Inverse VIX product.  Just about breakeven, made a little that went to commissions.

I think the market has slipped enough for now.  We'll see. The lousy market hurt many of my other positions, so a net loss for the day.

	Close	Initial Short	Gain (Loss)	Percent
NUGT	8.77	10.47	1.70	16.2%
BIS	27.83	29.75	1.92	6.5%
TZA	9.05	9.90	0.85	8.6%
VIXM	52.45	54.17	1.72	3.2%
RUSS	33.67	30.40	(3.27)	-10.7%
CORN	24.05	22.68	(1.37)	-6.1%
FAZ	11.12	11.26	0.14	1.2%
UVXY	33.49	40.68	7.19	17.7%
FXP	29.06	27.58	(1.48)	-5.4%
SCO	56.75	55.93	(0.82)	-1.5%