Software & Finance

Stock Market - Correction Continues...

Nov 15, 2010,  CBOE Volatility Index closed today at 20.20 and this low level of reading indicates that no fear in the market. With reference Market Reaction After Mid-Term Election, Fed Meeting, VIX is almost flat. It also provides a nice opportunity to increase the short positions on stocks and commdoties.


I have given here my favorties picks below:

CSCO - Cisco Systems, Inc

CSCO closed at 24.49 on last wednesday Nov 10, 2010. After the market close on last wednesda, CSCO announced Q1 2011 Earning. From that point CSCO shares were plummeted by 18.53% to 19.95 with a huge volume in the last 3 sessions. CSCO issued a total of 5.59 billion shares and total volume in the last 3 session is about 1 billion which is almost 6 times more of average volume. This strong negative sentiment on CSCO in the last week provides us a good entry point to go long on CSCO shares. Even the equity market correction is not complete, CSCO might outperform other technology shares. It is good to long CSCO from this level. For a trade, we can expect a good bounce any time. For investment, it is OK to start accumulating CSCO shares from this level on a long term basis.

ZSL - ProShares UltraShort Silver
GLL - ProShares UltraShort Gold

ZSL is one of top favorite pick as Silver is overbought at current levels. We can expect a steep sell of in commodities. ZSL is good compared to GLL as Silver is more volatile than Gold. SLV made annual High of 28.72 on Nov 9, 2010 and closed today 24.93 down by 13% from its annual high.

TLT - iShares Barclays 20+ Yr Treas.Bond 
EDV - Vanguard Ext. Duration Treasuries 

I have mentioned in my earlier update TLT is good to buy below 100 but it may go down little more before it starts the powerful rally. As expected TLT went down in the last couple of sessions and becomes very much attractive to buy at these levels. EDV closed today at 80.32 and TLT closed today 93.81. Both are good buys at this level. Note: Huge Sell off in treasuries often cause a powerful equities rally for a day or two as asset rotation takes place and it is often treated as bear market rally. As equity market correction is not complete, we can use the huge market rally to create new short positions.

UUP - PowerShares DB US Dollar Index Bullish

UUP, closed at $22.12 on Nov 3, 2010 and closed today 22.79,  is less volatile compared to other leveraged ETFs and it is more suitable for conservative investors. UUP can go even much higher from this point.

FAZ - Direxion Daily Financial Bear 3X
QID - ProShares UltraShort QQQ

It is ok to long FAZ (closed at 11.51) and QID (closed at 12.77) from the current levels. However be careful while trading with leverage ETFs.

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 Posted on Nov 15, 2010