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Saturday, November 14, 2009

Week-end Outlook!!

Time to do up a Russell chart, since it seems to be the leading index, topping two months ago, and now supporting a double top, as the rally of mid October failed to make a new high by only $1.18. That is a textbook topping action, having a follow-up rally unable to make a new high.
The Russell is getting very close to a do-or-die conditions, either it has to bust out and make a higher high, or it will keep drifting down to the last green fan line, where once broke, support is weak, and far away.

The last sell-off so far has corrected to almost 61.8%, a nice number in Elliott wave theory for wave 2 retracements. The Russell should start tipping its hand here very soon, if indeed it is now in wave 3 down.

Long TZA


  1. glad to hear I'm not the only one holding TZA long. Beautiful chart!!! =)

  2. Col, fantastic chart and analysis bro! Yep, that fan structure on the Russell is so compelling. Yeah man, if the next wave down becomes very impulsive for good old Russell, then a huge tell will be given by the market. TZA has been an exceptional vehicle for shorting tops (I have been going long with 10-25% on BGU at wave bottoms, but going 75-100% short with TZA during wave tops during the last 2 up down cycles. This one should hopefully be very profitable.

    Thanks for the chart man!

  3. col - very nice chart, thanks!

    binve - have you heard of any similar problems with tza as with the proshares double etf's? inverse and long? (law suits etc)

    i used to use twm and uwm, loved them, plus zsl, but when several brokerage firms quit allowing a person to buy, and only "sell" i felt i had to unwind using them

    just did a google on tza, and sounds interesting; i assume bgu is it flip side cousin ;-) ??

    thanks ya'll

  4. Adan, it's TNA/TZA for small caps. I trade them exclusively as they move the fastest of all leveraged funds.

    If I was an aware bull, I'd be very nervous right about now.

  5. Hey adan,

    BGU is 3x long large caps and TZA is 3x short small caps. So when the rally is up the large caps lead and when the wave is down small caps (and usually financials) lead down. I don't trust the up rallies hence only a small portion of my funds to trade that wave.

    As far a law suits. Yeah, there is a lot of rumblings and quite a few companies do not allow their clients to trade them. So besides the volatility decay (the biggest reason why these are *short term trading vehicles only*) the fact that they might become effectively outlawed when things start getting really bad is another.

    So my trading portfolio is always a small proportion of my overall investment funds, and I will never hold leveraged ETFs in my investment portfolio.


  6. Hey Col, I just added a couple of new paragraphs and a chart of the Russell in my newest post, building off of (and linking back to) the work you did in this post. Definitely check it out!

  7. Beautiful chart. I have had TZA since close to the top and it is not for trade until I am wrong or there is a trace of blood in the street. How did you get Fib Fans on stockcharts?

  8. "How did you get Fib Fans on stockcharts?"
    It is not that hard to do, ask me when I am in the chat room (CiL) and I will show you how I do them. :)