Today went about as one might expect with conditions short-term oversold at the
opening bell. So we had our rally based more on these conditions and a dash of
hope more than any positive news.
Really, we should rally a little here
as end-of-month dividends get reinvested. They still have those right? Then
there’s some typical upside action around July 4th possibly.
Volume was
about average but breadth both sucked and blowed. [Note: Something weird happens
to Yahoo/Finance just after 4:30--their ability to calculate columns is
destroyed.]
We got a lot of mail and comments regarding what
appeared as some poor tracking issues with a few leveraged inverse products.
ProShares has been responsive to this issue. ETF Digest friend and colleague
Greg Newton [NakedShorts.typepad.com] took the information the issuer sent us
and reworked it to account for a dividend which skewered results. Greg took the
time to produce the following table showing the results. You can see once the
dividend adjustment is made the result from the previous week made tracking
smoother and acceptably efficient.
Additionally, I’ll repeat my observations made Thursday
evening that investors should not expect precise intraday tracking and need to
give some of these issues time to work out whatever perceived inefficiencies may
exist. This might mean waiting a few days dependent on how exotic, illiquid and
new the leveraged issue might be. Finally, investors should take care when
placing orders to ascertain where the leveraged issue is trading versus the
comparable index and/or unleveraged issue.
The month of June ends with a
whimper and without any significant fireworks. GS stating to buy puts on euro
stocks was impressive. How much clout they have remains to be seen.
Have
a pleasant evening.
Disclaimer: Among other issues the ETF Digest
maintains long or short positions in: SDS, MZZ, QID, TWM,
IYR, SRS, SIJ, SCC,
DBA, DAG,
EFA, EFU,
EEM, EEV,
EWZ,
FXI and FXP.
