15 replies to this topic

[selecto]

Why is volume going into ultra short so much greater than volume going into ultra long?

[fib_1618]

Why is volume going into ultra short so much greater than volume going into ultra long?

Because it's far easier to be a bear than to be a bull?

Watching and listening to Bloomberg lately (as but one example), you would think that the world was coming to an end.

Fib

[da_cheif]

Why is volume going into ultra short so much greater than volume going into ultra long?

Because it's far easier to be a bear than to be a bull?

Watching and listening to Bloomberg lately (as but one example), you would think that the world was coming to an end.

Fib

yup...its easy..anybodycandoit......

[Russ]

From a contrarian point of view this is strong ammunition for the bullish case, which goes against my bias at this time. Must stay flexible.

[Iblayz]

I have the Proshares Semiannual reports from 11/30/2006 sitting on my desk at the office. The ultra short funds have no direct equity exposure and 8% futures exposure. 192% of their asset allocations are in swap agreements where cash changes hands at the end of the agreement based on the values of the underlying indices. The volume ratios have held up for several months on the QID/QLD in both up and down markets and are as much a function of the wide disparity in numbers of shares as anything. Granted, I do not know where each started in numbers of shares and the disparity, if they were equal at inception, has resulted from higher inflows into the short fund but, unless I have this completely wrong, it still doesn't mean that there are tons of shorts being added to the indices as a result of this. The Ultra Short funds are not directly shorting equities. Now the counterparties are hedging I'm sure. But I think that in most cases those are the big boxes and those guys hegde just about everything they do on a daily basis so the fees and the premiums go straight to the pocket.

[Jnavin]

It's way too early in the life of QID/QLD to read anything -- and I mean anything -- into the volume numbers. We won't know patterns and meaning until they've been trading for a year or two and they've become well-known as vehicles. Not there yet, not even close.

[arbman]

Both QID and QLD were advertised a few times lately on MSNBC and I don't watch MSNBC, I was just changing channels and I saw them. They are known well now among the market timers and gamblers, imho. They are also heavily used as a hedge too...

[no_mind]

"The second-largest short interest position on the NYSE, behind Ford Motor (F), is in iShares Russell 2000 Index (IWM) at 158,727,133 shares. The IWM is 3.0% higher ytd. and is 21.2% higher since the July bottom last year."



The above quote was taken tonight from the blog "Between the Hedges" . Personally I'm long some NYC.



Best,

Tom

[TradeMark]

I have been watching some of these new ETFs. It appers to me that there is much better liquidity / ability for better executions in some of these versus others. Say QID versus QLD for example. You can buy long or sell short QID just as well as QLD. So, much to be said for going with the better liquidity. This may change in time. Also, something to be aware of, though I have not yet studied the prospecti as yet, there are some pretty stiff "dividends" or otherwise "charges" that you could get hit with if short on the wrong day. In time, I think these ETFs will become quite popular. TM

[Rogerdodger]

TM said: "there are some pretty stiff "dividends" or otherwise "charges" that you could get hit with if short on the wrong day."
Mid December had a surprise for a lot of holder of these ETF's.

Selecto, here's my opinion:
People "own" stock.
Stock in real companies.
They "invest" for a lifetime.
They inherit grandpa's GM stock
Maybe it's their own 401-K, which they CAN'T sell for tax reasons and penalities.

But they want to hedge during downdrafts.
Without doing research on which stock to short, they place a market bet.
But where?
Typically Nasdaq offers more volatility so the QQQQ's, QID,and QLD etf's have more volume than SPY, SDS and SSO.
Also the price of Q's is 1/3 that of SPY. The little guy likes that.

Other than the low volume with typically greater spreads, I can't understand why many, such as the radio guru, are still shorting QQQQ and SPY rather than buying the QID or SDS.
Sometimes Q's and SPY are unavailable to short.
But with 1/2 the money, they could get the same hedge value if they purchase the QID or SDS, which are double short and always available.

It'll catch on.
Watch for the quad short!
There's a nightmare waiting to happen.

Edited by Rogerdodger, 23 March 2007 - 01:20 AM.