By Richard L. Muehlberg*
Posted: Nov 28, 2008
A lot of people lost a lot of money in technology stocks during September and early October 2008. If they had known about this basic trading / investing alternative, they could have hedged their portfolio or made a lot.
Displayed below, you see a 6-month chart for the NASDAQ 100 in the form of the exchange-traded fund (ETF) QQQQ®. The chart shows a super downtrend. How many technology traders and investors felt they had no alternative to QQQQ?
Figure 1: QQQQ Captured as of October 8, 2008
Now, look at a 6-month chart for the NASDAQ 100 in the form QID, the UltraShort ProShares™ ETF that tracks inversely with QQQQ. You see a super uptrend.
Figure 2: QID Captured as of October 8, 2008
Until the year 2000, I knew little about the NASDAQ 100. I kept hearing about it, but I was focused on other things. The NASDAQ 100 was not really being kept secret from me, but I was still in the dark.
Until early 2008, I did not know UltraShort ProShares existed. Even then, I learned about them slowly. I wish I had known more about both sooner. So, I am glad whenever someone writes an article that points out a timely new trading / investing alternative. This brief article is one way I can return the favor to others.
During September and early October 2008, did you have the sinking feeling that the NASDAQ 100 was going nowhere but down? What about the next six months? The point: Whenever you have an idea about the future of technology stocks, you now have at least two basic ways to put your idea into action.Think the NASDAQ 100 is going down? Go long QID. (Sure you could buy put options but are you set up to use options? Are you comfortable with directly shorting the QQQQ?) What about if you think the NASDAQ 100 is going up? Then, go long QQQQ.
Add QID to your eSignal watch list(s). For more information on UltraShort ProShares, you can visit www.seekingalpha.com. QID is just one of the equity index and sector ETFs that let you go long in a down market.
*Reprinted (and modified) with permission from Richard L. Muehlberg, who uses linear regression channels and intermarket analysis to day trade his own account. He publishes a day trading diary on his website (www.DayTradingWithLinesInTheSky.com). You can email him at richardmue@yahoo.com.
