Is the US market about to plunge downwards?
There are suggestions that the US indices are moving downwards.... the Russell 2000 ETF (IWM) is an ETF that tracks the price of 2000 US small cap stocks. This ETF has recently made a new low, and it looks like the 30MA is about to cross underneath the 50MA. It has been pretty range-bound for the past 6 months.
Is this therefore the start of a new down-trend? Of course, I don't know, but I am going to try and benefit from this if it does turn into a down-trend by going long with an ETF that magnifies the effect of a down-trend by a factor of 3. This is the Direxion Small Cap 3x Bear ETF TZA, which has been falling in value as the Russell has been rising in value, until this week, when it rose up through the 50 MA:
Now the perceived wisdom is that a leveraged ETF such as this is only good for short-term trading. Markets tend to fall much faster than they rise, so maybe this is a good reason to go long TZA, but only time will tell. By the way, at its' peak in Nov 2008 this ETF was priced at $9000. Today its priced at $18.00. If it rose back up to that value, (and I'm not suggesting that it will), it would have increased by a factor of 500! I've gone long with this, and will keep you updated!
Is this therefore the start of a new down-trend? Of course, I don't know, but I am going to try and benefit from this if it does turn into a down-trend by going long with an ETF that magnifies the effect of a down-trend by a factor of 3. This is the Direxion Small Cap 3x Bear ETF TZA, which has been falling in value as the Russell has been rising in value, until this week, when it rose up through the 50 MA:
Now the perceived wisdom is that a leveraged ETF such as this is only good for short-term trading. Markets tend to fall much faster than they rise, so maybe this is a good reason to go long TZA, but only time will tell. By the way, at its' peak in Nov 2008 this ETF was priced at $9000. Today its priced at $18.00. If it rose back up to that value, (and I'm not suggesting that it will), it would have increased by a factor of 500! I've gone long with this, and will keep you updated!
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