myfinancialmarket.com

Morning of October 3rd, 2008

As I write this morning, the Market is moving upward, yet yesterday the Dow was down over 3%. Since I look at stock charts on a daily basis, the so called good news is that it did not fall below Monday’s low. On the note of viewing stock charts, I sure like how Google provides stock charts with News about the chart. You might start with this one for the DJIA:

http://finance.google.com/finance?cid=983582&client=news

Years ago I had the intention of playing in the Options market and had developed a daily trading system, even opening up an options account with a Options Broker.  Although the results for the few months that I traded options were positive, I stopped options trading for a couple of reasons. The first is the volatility, watching quite large moves in my portfolio I had allocated for options. The second is the time it took to enter in the daily information in the model. The third is that at the same time a Mutual Fund trading model was performing well enough, and it didn’t require constant daily inputs into a model. Of course with the ability today to download stock and fund values, the effort now is easier.

The point here is that with the huge swings in the Market these days, it is tempting to once again go the options (or futures) route. In a way though, you can do a little of this by trading select Exchange Traded Funds, or ETF’s as they are called. ProShares and Rydex both have ETF’s that move at 2X to the Market, either going with the Market or against it. Before I continue here, a short disclosure is warranted, as given that this group of ETF’s move faster than the Markets, you may lose quite a lot on trading these. Continuing on though, ProShares as a series of ETF’s with Ultra or UltraShort attached to them. Check out symbols SSO or SDS, for example which go approximately twice that of the SP500. Rydex has a similar set, RSU and RSW.

What I have been leading up to is that I decided to trade RSU, a 2X of the SP500 ETF. Yesterday as the Market was tanking I bought a small amount of RSU and today I will sell it.  A word to the wise is to use limit orders as Market orders on these may not give you the best price. Again a disclosure is that this is what I do for only a small amount of my portfolio and I accept the fact that I may lose on trading RSU or other ETF’s, so be cautious if you decide to follow this approach. My overall point here though was to introduce you to ETF’s that can move faster than the Market and represents another way for investors (or should I say Traders) to play the Markets.

Don

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