Thursday, August 6, 2009

SRS: Primed for a bounce

I am not a big fan of SRS, especially for long term plays due to getting burned in the past but if there is ever a time to play SRS, now is it. The leveraging mechanisms for this ETF can cause a large percentage increase if there are any corrections in the market around REIT's and CRE exposed smaller financial institutions.

I have to pound the table on this one. SRS could see a 40% increase in the very short term. But don't hold it too long. You have to take your profits in these leveraged ETF's when you can. Don't get greedy.

The only leveraged ETF I can recommend that does not appear to have nearly the time decay as others is SDS. But again, not as a long term play.

Another great play right now would be to short or play puts on FAS. It has had quite a run up and any correction in financials will cause a pretty big correction in this triple leveraged ETF.

10 comments:

  1. Do you still think SRS is primed for a bounce? It has fallen 50% since your last comment on demise of commercial real estate in June and almost 10% since you published this article :(
    Now the holder of SRS - Proshare have been
    slapped with a lawuit. ( source www.etfguide.com). IYR has been up 35% in last 3 weeks.
    So again do you still think SRS is Primed for a bounce?

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  2. I believe the market is primed for a correction and given the recent runup for REIT's based on raising more money (not on profits), I do believe SRS should see a bounce. That said, I bought the other day and quickly got stopped out. SRS is a tough play no doubt and if timed right, can be a big gainer in both directions.

    But while SRS has fallen significantly since my comments on the demise of CRE, I specifically said SRS is not the best way to play it. Not that shorting KRE was any better, and got stopped out of that as well.

    CRE will blow up within the next 10 months and apparently money wants to believe the worst is over with CRE, or trying to make retail investors believe it is.

    ReplyDelete
  3. Beamer, really starting to miss your views of the market. Understand you had/have a lot going on. Disclosure: I am lightly short CRE, but have been driven to the sidelines otherwise. Too late to go long, IMO. This market is just too difficult for me to manage.

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