Short-Selling, Puts & Inverse ETFs 02 (Feb 12 - Dec 25)

[behappyalways]

Bought some SDS yesterday

[winston]

Bought some SDS yesterday

Good Luck !

[behappyalways]

Carl Icahn Is Betting Big on a Stock Market Crash
http://fortune.com/2016/05/10/carl-icah ... hp-popular

[winston]

Hardcore Bear ETFs Poised to Swell Past Bulls as Inflows Surge

by Lu Wang

(Bloomberg) -- The most aggressive traders are joining the growing ranks of those betting against the three-month rally in U.S. stocks.

Since the end of February, investors who use leveraged exchange-traded funds have sent $1.3 billion into exchange-traded notes that pay two or three times the inverse of the market’s return, meaning they go up when stocks fall.

So big have been the inflows that the market capitalization of inverse products is on the verge of eclipsing bullish notes for the first time since 2013.

Such deposits are rare when the market is rising: it’s the first time in at least five years that such ETFs attracted money while the S&P 500 advanced, data compiled by Sundial Capital Research Inc. show.

At the same time, ETFs with a bullish stance suffered outflows of $660 million.

While usually followers of prevailing trends, traders employing leveraged ETFs are now refusing to turn bullish even as the S&P 500 jumped 14 percent in a rebound that restored $2.5 trillion in values since the Feb. 11 low.

While some view the sentiment as a contrarian sign, levels of bearishness keep growing when measured by short interest and flows to defensive stocks.

“In order for stocks to have a sustainable rally, investors need to become more bullish, not less,” Jason Goepfert, president of Minneapolis-based Sundial, wrote in a note Monday.

“This has the potential to be a positive factor, but the flow of funds needs to reverse back in favor of long funds.”

Investors are embracing safety as the S&P 500 is within 2.5 percent of an all-time high reached 12 month ago and corporate profits are mired in the worst decline since the financial crisis.

Companies with stable earnings and dividend payouts, such as utilities and phone-service providers, have led this year’s gains, and the iShares MSCI Minimum Volatility ETF is the most popular drawing almost $5 billion in fresh money. At the same time, bears are standing firm, with short interest sitting near a seven-year high.

The inflows boosted assets among inverse ETFs by 30 percent to about $6 billion, with the group poised to close a deficit held versus long ETFs that at its worst point swelled to more than $8 billion last year.

Sundial’s study found that since 2010, there have been five instances that the S&P 500 advanced as it just did in February and in all instances, inverse products suffered outflows.

This year, traders kept adding to their bearish bets despite the rally. UltraShort S&P500 ProShares, whose daily return is double the inverse of the gauge’s performance, has attracted $950 million since February, data compiled by Bloomberg show. ProShares UltraPro Short S&P 500, designed with a triple effect, added about $480 million.

Source: Bloomberg

http://washpost.bloomberg.com/Story?doc ... ILHJ6C2K8S

[winston]

Bearish Bets Reach a Five-Year Extreme... Here's What to Do

By Dr. Steve Sjuggerud

Investors are betting BIG against U.S. stocks…

Should you be betting against U.S. stocks, too?

Do they know something you don't know?

No, and no!

Here's why…

Huge bets against the stock market are a classic contrarian buy signal… In plain English, when EVERYONE is doing one thing in the markets, you should consider doing the opposite.

Let me show you today's bearish extreme – and show you what happened the last time we saw the exact same bearish extreme in 2011.

Here are the details:

Investors have added more than $1 billion to one particular trade this year… Specifically, assets in the most popular inverse exchange-traded fund (ETF) in the stock market are up more than $1 billion this year.

Investors haven't been this bearish since October 2011, according to this extreme.

Importantly, after that October 2011 extreme, the S&P 500 soared 51% over the following two years.

We might not see 51% gains over the next two years. But this extreme shows that investors are extremely bearish on U.S. stocks. And history tells us this is a pretty good contrarian buy signal.

The simplest way investors can bet against the stock market is by using ETFs that return the inverse of the overall market. That means the funds return the opposite of the daily change in the S&P 500. So if stocks fall 1% in a day, these funds should rise 1%.

The largest of these inverse stock market funds is the ProShares Short S&P 500 Fund (SH).

This fund has fallen dramatically in value – by more than 50% – in just the past five years.

You might think that after a 50% fall, investors would start to flee from a fund like this. The reality is, the opposite has happened… Investor money in SH is now bumping up against all-time highs, last seen in 2011.

This chart tells the story…

It's the overall stock market versus the total assets of SH. (Total assets are the share price multiplied by the total share count. ETFs create and liquidate shares based on demand. An increasing share count shows investors are putting new money into an idea.

In this case, they're betting against the S&P 500 by buying SH, which increases the fund's total assets.) In 2011, the stock market fell by 19%, and assets in SH soared. After that, stocks rose 51% over the next five years.

Interestingly, as you can see today, bearish bets in SH have reached levels not seen since 2011 – even without a preceding fall in stock prices.

We can't promise a repeat of the 51% gain in two years that we saw last time around. But this extreme shows us the degree of negativity in the markets today.

Investors aren't euphoric. They don't expect to make money. Instead, they're betting against stocks at an extreme level.

This type of action doesn't happen at market peaks. It's yet another sign the market has plenty of room to run higher.

Just because everyone is scared of stocks doesn't mean you need to get out, too. If anything, it means the opposite. Now is a great contrarian "buy" moment.

Source: Daily Wealth

[winston]

These Billionaire Investors Are Playing a Risky Game of Russian Roulette

By John Del Vecchio

It’s one thing when some online commenter yells “fire” in the crowded stock market theater, expecting investors to jump ship and dump their investments before the “Crash of a Lifetime.” It’s another when multi-billionaires who made their fortunes from speculation take huge bearish bets in the market.

The billionaires are positioning themselves for a big butt kicking in the market.

One after the other, they are lining up their investment strategy for negative stock returns ahead. George Soros, who famously made $1 billion in a day shorting the British Pound, has made a massive short bet in the S&P 500.

Carl Icahn has made a huge bearish shift in his portfolio. According to Barron’s, he was 149% short at the end of the first quarter compared with 25% at the end of 2015 and 4% net-long a year ago.

Now Paul Singer, less well-known than Soros and Icahn, but still an investment powerhouse in his own right, is joining the fray and loading up on gold.

Are these Wall Street legends making the right call? In my own opinion, the odds favor lower stock returns ahead. Much lower.

First, we are in the midst of one of the longest bull markets ever. Whenever there’s a little scare, a magical wave of buying comes into the market to prop up stock prices. Even the worst start to a year ever couldn’t stop stock prices from advancing in 2016. But, that is not sustainable.

Not only is this bull market long in the tooth, but valuations are also in nosebleed territory. The median / price sales ratio on the S&P 500 is at its highest ever. There is nowhere to hide.

So if you want to ride Soros’ and Icahn’s coattails, what can you do?

Well, there are a few ways to short the stock market. You can bet on a fall by buying put options. Of course, your timing might have to be impeccable in order to cash in on your bearish bet. There’s nothing worse than being right but having the wrong timing.

You can also get against an index like the S&P 500. In general, I think inverse funds are bad bets. For one, when you short the S&P 500 you are shorting companies like Apple [Nasdaq: AAPL] and General Electric [NYSE: GE].

Even worse are levered inverse funds that re-set their portfolio daily. The higher volatility of bear markets tends to chop up these funds over time.

So, it’s possible that the market could fall 20% but you still lose money owning a levered inverse fund. Your outcome depends to a large extent on the progression of daily returns in the stock market. No one can predict that.

The largest companies in the U.S. market dominate the S&P 500 index. Why would you short the world beaters? Sure, they may go down, but will they go down as much as a third-tier company operating in one market that just saw its largest customer go bankrupt? Probably not.

That’s why, at Forensic Investor, we prefer to short individual companies. Companies that have aggressive accounting where management is pulling the wool over investors’ eyes and artificially propping up their stock price can lead to solid returns, even in a bull market.

But, in a bear market where there’s real selling and real blood in the streets, investors tend to sell these low-quality stocks first and ask questions later. That can lead to outsized returns from the Dark Side.

Sometimes we will short an entire sector, like technology, where the entire space may be exposed to low earnings quality. But, the real juice in a bear market comes from individual stocks imploding.

While the S&P 500 was cratering in 2008 there were many stocks falling 2x-2.5x what the market was doing.

Source: Forensic Investor

[winston]

by behappyalways:-

A List of Short Oil ETFs

http://etf.about.com/od/commodityetfs/a ... l-Etfs.htm

[winston]

How to Profit from the New Post-Brexit Paradigm

By Shah Gilani

Source: Money Morning

Source: Wall Street Insight

http://wallstreetinsightsandindictments ... /#deeplink

[winston]

How to Profit from the Mother of All Black Swans

By SHAH GILANI

Short the euro against the U.S. dollar, big time, with the ProShares Ultra Short Euro ETF (NYSE Arca: EUO). This leveraged exchange-traded fund will return twice the euro's daily decline (or lose twice the euro's daily advance) against the dollar.

It'd be worth it to maintain a speculative position here until the bomb goes off (and you get paid off) or Deutsche Bank averts disaster, at which point you should unload these shares.

Source: Money Morning

http://moneymorning.com/2016/07/14/how- ... ack-swans/

[winston]

The Inverse ETF Way To Manage Risk And Profit From A "Toppy" Market

by APARNA NARAYANAN

In range-bound markets, an inverse ETF may significantly lag its benchmark.

The up and down moves make it prey to "beta slippage" or "volatility decay."

Investors go long when an index is above its 200-day moving average. When it falls below the 200-day, they put on a tactical short trade with an inverse ETF.

Source: Investor's Business Daily

http://www.investors.com/etfs-and-funds ... yptr=yahoo