This Is Not Investment Advice
Concept of Hedging Should Be Intuitive If You Actively Invest . . . . But How . . . . Lev and Inverse ETF Something Smells Fishy
I’m hedged but like anyone else not perfectly and probably not enough. UUP seems relatively logical to me for several reasons and it is a boring, non-levered ETF. Fair enough.
Hedging with other ETFs both inverse and/or levered leads to too many potentially avoidable losses to me. Too many people all gathered in the same boat and on the same side of the boat. I’m not entirely sure precisely how holders get hosed, but when VOL jumps 30% and UVIX only pops 10% then one must ask what the point is of watching a slow drip just to get the pop that directionally arrives but is lacking in size in a big way.
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That said I very well might hit UVIX hard at some point, but I’m gonna need to see a confirmed breakdown, a weak retest, and the Weekly Money Flow on UVIX Green first. Translation - the next time I use UVIX it will be when a potential wipeout is already in motion and the market shows me some legit support behind it already.
So what should I do?
Single Stock Shorts. But first I need to find some plausibly good candidates. “Defensives” can get a decent counter-trend rally going when Risk On crumbles into a correction, so I don’t want that. I want to focus on sectors of the global economy and industries in a secular decline. I want to find poor performers and/or wobbly overhyped junk that is within a secular decline, has a RS between 10 and 40 preferably, and is running up against resistance and failing. I want stocks that likely won’t rise all that much when the ‘Melt Up’ rips higher but are quite likely to decline sharply when the market does the same.
Weak Industry Groups
Here are the two groups on which I will primarily focus for this until otherwise stated:
Beverages - Alcoholic
Consumer Services - Education
Might need to put in extra work on the Ed stocks as a couple have been absolutely destroyed very recently. Secular declines are tough to counter. Look at the drop in the rankings for that group last six weeks. Yikes.
Here’s a possible play as I work on refining this further:
DEO
RS 16
Industry Group RS E
Industry Group Rank 197
Acc/Dis E
Up/Down Volume 0.4
