Blogs & Comment

Surf the volatility, dude

The violent sell-off in stock markets this Monday morning, along with the stream of bad economic news of last week, is bound to provoke substantial cuts in short-term interest rates by the Federal Reserve and other central banks. Stock markets should thus be near a good rebound, especially given near-term oversold conditions.
If you went into those double-short ETFs last week, take the 10% to 25% gains so far and shift into the double-long ETFs. There is a list at I myself bought the Horizons BetaPro S&P/TSX 60 Bull Plus ETF(HXU) and the ProShares Ultra S&P500 ETF(SSO or should the symbol be SOS now?). It could be early and thedouble-long ETFs could come down fast, but they can come back fast too.
If and when the rally comes, it may be short-lived as attention shifts back to the worsening economic indicators parading through the headlines. So one could don their traders hat or consider buying and holding since its hard to imagine stocks staying below this level over the next year to three years. Moreover, the Fed and politicians will likely have a number of other counterpunches lined up after the first rate cut.