Ultra Financials Snap Back

On March 3, I wrote an article called Ultra Financials Stretch, from which the following:

To give you an indication of where we are in this market, consider the popular ProShares UltraShort Financials ETF (SKF). Here’s its six-month chart:


Notice that it’s back up at the $200 line, a level it pierced only in November’s crescendo crash, but turned back from sharply in January and February. Unfortunately, each of those tops was accompanied by an RSI higher than the current 62. Nonetheless, anybody holding this would be wise to have a trailing stop in place.

That being so, the opposite trade beckons, does it not? SKF’s inverse, ProShares Ultra Financials (UYG) should now be nearing oversold conditions at an RSI of 30, and it is: 33.

Consider this week to be the snap back. Here’s how SKF’s six-month chart looks now:


SKF holders were glad to have placed a trailing stop, I’m sure! It rode to the peak of $250 and then bailed out at the beginning of the crash. The opposite trade, UYG, got down to an RSI of 29 and a price of $1.51 on Monday. It closed yesterday at $2.35.

This entry was posted in Uncategorized. Bookmark the permalink. Both comments and trackbacks are currently closed.
  • Here are your three options:

    Option 1: Annual Subscription (no refunds)

    For just $200 per year, you’ll receive everything listed above to completely upgrade the way you manage your investments. This is 17% cheaper than the monthly option. This is what I recommend:






    Option 2:Monthly Subscription (no refunds)

    If you'd like to try The Kelly Letter  without paying the full year, you can pay $20 per month.





    Option 3:Free Email List

    If you'd like to hear more from me but aren't ready to part with any money yet, you're welcome to join my free email list:

    Join the free list





    Thank you for the work you do. You're a household name here and my wife and I often discuss your letters on Sundays. My ten- and seven-year-old children recognize your name and will eventually be taught to invest using 3Sig and 6Sig. You've had an enormously positive impact on our investing and inspired me to look at the world in more rational and clear terms than I did years ago. I'm sure that thousands of others would say the same. Kelly Letter subscriber Matt Barnes
    Matt Barnes
    Product Line Director
    OCLC

    Join Matt and thousands of other rational investors to invest without stress.

    Subscribe to The Kelly Letter  now!

Bestselling Financial Author