Why actively trade ETFs?

[Bankedout]

Quote from deronwagner:

Looks like the DIA short is working out well. My post on November 26 predicted a top of just over 91 in DIA, which is where the rally stopped a few weeks later.

If you are short, I would consider trailing a stop above the upper channel resistance on the daily chart. That could have marked the high for a retest of October lows. We shall see!

Did you actually short DIA near 91? Where is the upper channel resistance on the daily chart?

I enjoyed reading your November 26th post.

Banker

 

[deronwagner]

Hi Banker,

Yes, we shorted using options (bearish credit spread).

I am looking at the upper channel resistance of the trendline the high of December 2, connecting the high of December 26. This also lines up with the 50-day MA, which is around 85.66.

I often use options on the longer term shorts. I don't make as much, but the risk is lower with a credit spread.

Deron

Quote from Bankedout:



Did you actually short DIA near 91? Where is the upper channel resistance on the daily chart?

I enjoyed reading your November 26th post.

Banker

 

[Bankedout]

Quote from deronwagner:

Hi Banker,

Yes, we shorted using options (bearish credit spread).

I am looking at the upper channel resistance of the trendline the high of December 2, connecting the high of December 26. This also lines up with the 50-day MA, which is around 85.66.

I often use options on the longer term shorts. I don't make as much, but the risk is lower with a credit spread.

Deron

It must have taken a lot of guts to short at that point in time, with the daily chart chugging along in an upwards direction back then. I can see your reasoning in a longer term sense though. Thanks for pointing out your line on the charts for me.

What's a credit spread?

Banker

 

[big_jdez]

Deron,
I've been fiddling around a bit with ETF's, looking at them using Point and Figure charts. I read in Market Wizards about Gil Blake and how he mentioned the reason he preffered to trade sectors was because of a sector's 'trendablilty". In that book or perhaps Gary Smith's "How I Trade for a Living" they mention how a 1% change in price usually signals a longer move. Looking at BBH you see only 1 recent move that was only 1% before reversing. Of course it helps to know how P&F charts are charted to fully appreciate it.
Anyway just some food for thought, let me know what you think.
BTW, BBH has finally fallen through that trend line, it might be a good short here.

EDIT: This is .5% boxes with a 2 box reversal and the data hasn't been updated since the 24th.

 

[deronwagner]

Well, not really a lot of guts because I was looking at a longer time frame, so I was willing to take a little pain if I needed to. Also, the credit spread greatly reduced the risk to step in and short as the Dow was rallying.

A credit spread means that I collect a net premium by selling out of the money calls and buying a further out of the money call for protection. My profit is the difference between the cost to buy the call and what I collect on the call I sell.

Deron

Quote from Bankedout:



It must have taken a lot of guts to short at that point in time, with the daily chart chugging along in an upwards direction back then. I can see your reasoning in a longer term sense though. Thanks for pointing out your line on the charts for me.

What's a credit spread?

Banker

 

[big_jdez]

Here's an updated one to 1:30 this afternoon.

 

[big_jdez]

Here's OIH, look at the columns, very few columns with less than 3 boxes.

 

[big_jdez]

Look @ PPH's move from the bottom without reversing 1%.
Look @ trendline, we went right thru it now.

Removed chart, it was updated thru 12/19 only, so I removed it and replaced it with the updated one with same trendline and of course the trendline was pierced a while back.

 

[big_jdez]

PPH

 

[deronwagner]

Thanks for the info.

I will look at your charts and get back to you after the weekend.

Deron