Stock forum members play inverse ETF in hope of a crash.
Given today’s – what would you call it – blunt? – statements made in a report issued by the Royal Bank of Scotland (NYSE: RBS, Stock Forum), calling for what amounts to stock and bond market chaos in the not-too-distant future (three months), it seemed an appropriate time to check back in with bears on the Horizons BetaPro S&P / TSX 60 Bear Plus ETF (TSX: T.HXD, Stock Forum) Bullboard.
Before diving in to the HXD board, however, let’s look at an excerpt from the Royal Bank of Scotland report, authored by Bob Janjuah, Kit Juckes, Tim Jagger and Richard Smith. The following statements from the report are taken from an article in Britain’s Telegraph:
Our macro economic road map is playing out - slow growth for longer, deep into 2009, with the pain spreading globally, gradually. People are beginning to wake up to the view that 2009 growth will be stagnant and weaker than 2008.
The twist however is inflation, and in particular how central bankers deal with this stubborn problem. The worry is that the ECB raises rates even as growth falters, leading to bigger cuts in 2009.
In the US, policy paralysis is possible, whatever the Fed jaw-boning. And in Asia, uncertainty reigns. All in all, a poor backdrop for risk assets and a sure fire recipe for higher volatility.
More quotes from report co-author Bob Janjuah could be found in a companion article in the Telegraph by Ambrose Evans-Pritchard, in which Janjuah says, among other things:
"A very nasty period is soon to be upon us - be prepared."
"I do not think I can be much blunter. If you have to be in credit, focus on quality, short durations, non-cyclical defensive names. Cash is the key safe haven. This is about not losing your money, and not losing your job."
And finally, "The Fed is in panic mode. The massive credibility chasms down which the Fed and maybe even the ECB will plummet when they fail to hike rates in the face of higher inflation will combine to give us a big sell-off in risky assets."
Stock forum members on the HXD Bullboard have their own opinions of the situation. Drainmancometh said today:
The TSX has thrown reason out the door to the point where even bulls are getting nervous: it rose way more than any other index in the world and has further to fall when this collapses. I think the most painful thing would be to watch from the sidelines as this stock skyrocketed after having locked in losses. You know what I mean?? [sic]
obbguy followed the above words with this assessment:
The lower than average volume recently indicates traders/investors has not been participating in the rally. The institutions can drive the markets down/up at their whim if they spot huge money making bets.
So the recent rally..is just a sucker rally imo...
On a technical view, this is one ugly chart..possible triple top, bearish head and shoulders, and the index might even make new highs (and I am still betting on a hard drop)...probably in the 15200-15250 levels. It may happen tomorrow or perhaps before option EX expires or possibly next week for another new batch of highs to force traders to forfeit their put options [sic].
The investor later added, “Watch the volume on the down days. If it exceeds the ones in the rally, this indicates hard selling going on. my gut is telling me big boys are unloading. money flow continues to be negative [sic].”
If the report from RBS is making you concerned, then share those concerns on the HXD Bullboard.
