Open Portfolio - Taking Small Bet Against the S&P 500 - Mike Swanson (08/02/12)
I took a small position in SDS today, which is the ultra-short S&P 500 ETF designed to go up when the stock market goes down.
I was thinking about shorting the market and betting against it last week, but really wanted to see what happened with the FOMC yesterday and ECB today before doing anything. That made me be about 30 points from the recent S&P 500 peak, but that's ok. I just did a small position. My thinking is the market will likely correct a bit on August and take back much maybe even all of its gains of June and July so the overall trend should be down this month. However, since I'm not on the recent high I have to give myself room to make sure I don't get shook out of this position and even possibly add to it if I decide to. I might do that if the VIX falls again below 16 1/2.
My real goal is to do big long-term investing, but to do that I need to be patient for things to play out more. So for now just looking to do a trade. I expect to get out of this SDS position in the next few weeks.
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