XLE: Is It Totally Insane to SHORT it?

Discussion in 'ETFs' started by shortie, Feb 24, 2011.

Your Best Guess on XLE

  1. 1-2 Weeks: LONG, 2-3 Months LONG

    10 vote(s)
    58.8%
  2. 1-2 Weeks: LONG, 2-3 Months SHORT

    3 vote(s)
    17.6%
  3. 1-2 Weeks: SHORT, 2-3 Months LONG

    2 vote(s)
    11.8%
  4. 1-2 Weeks: SHORT, 2-3 Months SHORT

    2 vote(s)
    11.8%
  1. [​IMG]

    this bugger:
    is approaching 2008 High
    UP >50% since summer
    keeps going UP along the almost perfectly straight line
    OIL keeps pushing higher and the Middle East/Africa is on Fire

    BUT:
    there is RSI divergence
    SPY is shaky, could it pull XLE down?
    what if Libya stabilizes soon?

    other thoughts? :confused:
     
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  2. Yes, it is totally insane to short this.

    Do not try to catch a falling knife.

    There is no evidence, at all, of any kind, of a trend change.

    If you short it and win, you will blow up. Luck and systemic trading are completely different animals.
     
  3. But there are no pullbacks to jump on the trend :confused:
     
  4. Do not chase a trend, you are too late. You must wait for a pullback to get long, and a failure of that pullback go get short. Impatience is expensive.
     
  5. i like your wisdom.

    XLE is slightly weak this morning but not much -0.7%
     
  6. RSI divergence doesnt mean anything just look at gold and silver charts.
     
  7. both sold off after the divergence was in place for some time. similarly, RSI divergence for XLE has been building up for a while.
     
  8. I see that also, but I would ignore any sell signals until 75.22 is broken to the downside. That is the nearest old fractal high. Until then weakness has to be considered profit taking, and not a reversal.
     
  9. bone

    bone

    If you wanted to short XLE, I would do it as a relative value spread play against one of the components within the basket that has been especially strong in the rally and that you would expect to continue to outperform the balance of the basket in a broad market sell-off.

    My 2 cents.
     
  10. but you are making an assumption that the technically strong stock will continue to be strong. the assumption is so simple it can't be correct >50% times.

    unless you have some fundamental insight to help select the best stock going forward, your spread strategy won't work.
     
    #10     Feb 24, 2011