Big down days like today can really stack up the profits. These are the kind of days I love to be trading in, but for many investors trading in this type of day using Ultra Short ETF products can be daunting. One of the trades I discussed this morning before the markets opened was in the NASDAQ SQQQ. I explained that I would be entering the SQQQ this morning. The SQQQ is the Ultra 3 times short ETF (300%). As explained in my morning article, the QID could also be used which is a 2 times short ETF. The NASDAQ was picked over the Dow for a number of reasons. The first was that I am already holding a large quantity of the SDOW ETF from earlier this month as I anticipated there would be a pullback based on the performance of the indexes this month.
While many analysts kept pointing to the NASDAQ and the Russell 2000 as giving the market an “all clear” signal, I commented that I felt while the NASDAQ might try to lead the markets higher, small caps rarely if ever are of significance for the large cap market. Therefore I indicated yesterday that in today’s sell-off I would be buying the SQQQ in a bounce at the open. The NASDAQ was ripe for a big tumble as it was too high in relation to the Dow and the S&P. Therefore I expected the NASDAQ would tumble further than the other two major indexes and indeed while the Dow is down presently around 1.75% the NASDAQ is down 2.20%. Indexes normally trade within tight percentages of one another. When one index gets ahead of the others, that is the index to pick for big down days.
But trading these Ultra ETF products can be daunting for many investors. Knowing when to buy, when to hold and when to sell can be difficult choices. When it comes to trading these Ultra ETFs on big down or big up days I turn to the professional trader to assist me and instead of having one or two pros helping I know how I can have a thousand pros offering me guidance and it costs nothing for this information.
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Disclaimer: There are risks involved in all investment strategies and investors can and do lose capital. Trade at your own risk. Stocks, options and investing are risky and can result in considerable losses. None of the strategies, stocks or information discussed and presented are financial or trading advice or recommendations. Everything presented and discussed are the author’s own trade ideas and opinions which the author may or may not enter into. The author assumes no liability for topics, ideas, errors, omissions, content and external links and trades done or not done. The author may or may not enter the trades mentioned. Some positions in mentioned stocks may already be held or are being adjusted.
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