Two Ways: Shorts on Short Leash
Strengthen your portfolio in good times and bad.
New rules are out on short-selling by the Securities and Exchange Commission. According to The Wall Street Journal, investors will now have access to fresh information about the volume and velocity (such as the exact time and position) of the downside bets made against companies. Traders will also have to settle their short sales within four days.
Hedge funds also won a small victory because they now won't be required to disclose details of their short positions. They had fought such disclosures because posting them would be the equivalent to revealing trading secrets. All this information will still be delayed by one month and the SEC said self regulatory organizations like the Financial Industry Regulatory Authority will start posting this information as soon as the next few weeks.
From the Bull Pen: Stocks may seem overbought in some sense but it doesn't seem like the short environment has gotten any better. Dow Theorists are pleased to see the transportation index (TRAN) break out above 3400 resistance. Investors can use any pullbacks in the ETF (IYT) to $61 as an opportunity for upside exposure.
From the Bear Cave: Yesterday we heard a story of UBS (UBS) banning all trading in the leveraged ETFs. Does it make sense to short these stocks for the longer term, especially if this becomes a trend? Minyanville has already talked about how the math simply doesn't work in these vehicles. One idea is to play the downside in something like the 3x Bear Financial ETF (FAZ) using long term puts (where your risk is equal to the premium).
Quick Check Around the World
Asian trading closed with the Hang Seng 1.84%, India -0.28%, Shanghai 0.09%, Nikkei -0.01%, and Taiwan 1.62%.
Across the pond, we see the FTSE +0.37%, CAC -0.03%, DAX -0.36%
As of 8.20 AM EST, S&P Futures are trading -6.25 to 973.75 and Nasdaq futures are -8.00 to 1591.50.
A Look at Commodities
Over in commodities, crude oil is trading -0.46 to 67.92 while gold is -1.400 at 952.10 this morning. Silver is -0.100 to 13.98 and copper +2.150to 256.20.
The dollar index is +0.0150 to 78.7700.
On the Radar
09:00 Consumer Confidence 48.7 cons.
09:00 S&P/Case Shiller Home Price Index -17.80%
Click here for the full trading radar.
Good luck! Have a great day!
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