You can see from the table below that the recently introduced triple long and short ETFs from Direxion already do pretty good volume. Many of the full-time day traders I follow on Twitter (Andy Swan, Brian Shannon, Nick Fenton, Steven Place, etc.) frequently trade the Financials (FAS & FAZ) from Direxion as well as the boring old double-leveraged standbys from ProShares like UYG, SSO, DXO, DIG, etc.

I’ve mentioned to my newsletter subscribers that I don’t think the double-leveraged ETFs (let alone the triple-leveraged) are suitable for “investing” since they’re erratic and don’t track well (they target daily percentage changes), and I refuse to include them in my “core” portfolio, but they’re definitely good day trading vehicles.

One of the things I like to do while on vacation in America is wander the grocery store aisles, straying from my usual stick-to-the-periphery routine. This time I was stunned to see that Kraft Mac & Cheese is now available in a microwaveable cup. What can it mean for my once-great country that its citizens now find it too taxing to make Mac & Cheese from a cardboard box?

Boiling water, pouring in, cooking, and draining the macaroni (al dente!), ripping open the packet of toxic orange “cheese” dust and sprinkling it on, throwing in a quarter-stick of butter (half stick if you’re over 250 pounds), and finally splashing in some whole milk to complete the wretched concoction — is that all too much to ask of discerning connoisseurs?

Stay short the US Dollar.

Lots of significant reversals among the 125 ETFs I follow for the newsletter. Perhaps most importantly, the system is finally selling the 7-10 Year Treasury Bond Fund (IEF) which it has been long since November 2007. Friends in Canada and Australia should know that the system is covering shorts in those equity markets and going long on Monday. Readers from Brazil, Russia, India, and China already know that the system got long their markets back in December.

The newsletter is still free (until I settle in following my recent return and finalize the “core” portfolio), so if you’d like to join the mailing list just email me.

Here are the total returns for calendar-year 2008 for selected Vanguard Funds:

• Prime Money Market Fund: 2.77%




• Short-Term Bond Index Fund: 5.43%
• Intermediate-Term Bond Index Fund: 4.93%
• Long-Term Bond Index Fund: 8.73%
• GNMA Fund: 7.22%
• High-Yield Corporate Fund: -21.29%
• Inflation-Protected Securities Fund: -2.85%
• Total Bond Market Index Fund: 5.05%




• 500 Index Fund: -37.02%
• Convertible Securities Fund: -29.79%
• Dividend Growth Fund: -25.57%
• Total Stock Market Index Fund: -37.04%




• Extended Market Index Fund: -38.73%
• Mid-Cap Index Fund: -41.82%
• Small-Cap Index Fund: -36.07%




• Energy Fund: -42.87%
• Health Care Fund: -18.45%
• Precious Metals and Mining Fund: -56.02%
• REIT Index Fund: -37.05%




• Emerging Markets Stock Index Fund: -52.81%
• European Stock Index Fund: -44.73%
• Pacific Stock Index Fund: -34.36%
• Total International Stock Index Fund: -44.10%

Total returns for calendar-year 2007 for selected Vanguard Funds

Total returns for calendar-year 2006 for selected Vanguard Funds

Total returns for calendar-year 2005 for selected Vanguard Funds

Total returns for calendar-year 2004 for selected Vanguard Funds

I will be away until after the New Year so posting will be light to non-existent for the next three weeks. I encourage everyone to subscribe to my feeds to keep track of me:

Site feed: http://feeds.feedburner.com/Maoxian
Delicious links feed: http://feeds.delicious.com/v2/rss/maoxian
Twitter feed: http://twitter.com/statuses/user_timeline/802209.rss

Thanks for your patience during my absence and I look forward to returning in January!

Treasury Bubble Talk Grows as U.S. Gets Free Money

“The 30-year bond returned 23.6 percent since September, including reinvested interest, more than it earned in any one year since gaining 34.1 percent in 1995, according to Merrill Lynch & Co. index data. Treasuries of all maturities gained an average of 11.9 percent this year, compared with a 41 percent drop in the Standard & Poor’s 500 Index and a loss of 15.3 percent in Merrill Lynch’s broadest corporate bond index.”

Why does Billionaire Gross’s hedged phrase “some bubble characteristics” remind me of “being a little pregnant”? Anyway, everyone is watching the long bond for a reversal, including me. I wouldn’t exit them or short them until the weekly trend shifts down.

Here’s a good example of a punchy headline that gets lost in translation:

The “horrific market bottom” becomes “world markets have further to fall.” I found the article useful, not for its silly guesses (”The S&P may plunge another 55 percent to 400 by 2014“), but for sentiment reasons: You don’t see pieces like this one at market tops.

XL, Bermuda’s Biggest Insurer, Is Said to Seek Buyer

“Syncora faced a wave of claims after collateralized debt obligations it insured declined in value. XL had $292.9 million in investment losses in the third quarter, took a $1.4 billion charge tied to Syncora and said unrealized losses widened to $2.59 billion.”

The market knew there was trouble at XL long ago because the stock has been underperforming the index since the middle of 2003 … you absolutely must keep an eye on relative performance. I don’t look at individual stocks anymore (purely an ETF man now), but there’s no way any chartist would be holding this stock in the run-up to the collapse, let alone after it began with the break below $60.

Treasury Bills Trade at Negative Rates as Haven Demand Surges

“The U.S. sold $30 billion of four-week bills today at zero percent for the first time since it began selling the debt in 2001. If you invested $1 million in three-month bills at today’s negative discount rate of 0.01 percent, for a price of 100.002556, at maturity you would receive the par value for a loss of $25.56.”

This is my latest electrocardiogram. Just kidding, it’s a chart of BIL, the SPDR Lehman 1-3 Month T-Bill ETF. Year-to-date total return here is +1.75% which is fantastic compared with -37% for the SPY. My system last bought BIL back in July 2008, which was pretty good timing.

Treasury Sells Three-Month Bills at the Lowest Rate Since 1929

“The bills were sold at a high discount rate of 0.005 percent, the Treasury said today in Washington. At last week’s auction, the bills drew a rate of 0.05 percent. The government received bids for the bills totaling more than triple the amount sold … The rate on three-month bills peaked at 16.75 percent in May 1981. Today’s rate was the lowest since the government began issuing the three-month bills in 1929. The return to investors is 0.005 percent for the three- month bills, with a $10,000 bill selling for $9,999.87.”

13 whopping cents!

The long bond has had a huge run of late … it’s interesting to note when my system went long various bond ETFs: it went long IEF (7-10 Year bonds) and TIP (Inflation-protected bonds) way back in November 2007. I’m watching anxiously for a reversal across all the bond ETFs I follow.