XIV under 50 ema (42.4) before FOMC and it could be possible to either 200 ema (32.0) or above 50 ema after FOMC. At this time, I hope XIV bounces above 50 ema for a run after the FOMC.
In 2011 I believe it dropped from $18-19 to $4-5, stayed around there for months and that downturn wasn't even close to the 2008-2009 debacle. Buy it on margin and get rich, I dare you!
up, down and up
Check the Nikkei chart from Feb 2006 to September 2006 and the major concern is the balance sheet reduction and market reactions.
The Japanese QE from March 2001 to March 2006 increased the BOJ balance sheet from JPN 110T to JPN 225T and the BOJ increased the rate by 0.25% in July 2006 after reducing its balance sheet. The Nikkei 225 chart from February 2006 to September 2006 shows certain market patterns: uptrend (toward to the end of QE); downtrend (from the end of QE to the beginning of rate increase); and uptrend (after rate increase).
The FED has a USD 4.4T balance sheet with USD 2.5T in excess reserves. At this juncture, I have no idea how the FED will reduce its balance sheet to increase an interest rate. In any case, when the FED began to reduce its balance, we will possibly see a downtrend market like Japanese market did and, of course, when the FED began to increase an interest rate after reducing its balance, we will have an uptrend market. Probably, we may need to have some trading strategies accordingly for the period between the end of QE and the beginning of interest rate increase.
I guess we have to wait for some comments from Yellen next week. Probably we will have a XIV run until the end of QE.
There are slight decays with XIV. Still since late 2011 it is up from 3.75 to 42.45. Since 2004 it would be up 34% per year. Not a bad little return.
The Fed will just not let this market drop, ever, no matter what. You're looking at XIV around $1000 in 10 years, split adjusted of course. So call it 60 with 4 forward splits.
Are there any adverse effects (similar to buying 2x or 3x ETF's) for long term degredation when buying XIV? Or in theory if someone had bought this back in 2011 when the world was crazy they would have made 7x their money by now? Seems like whenever there is a bursting bubble this is a great long term plan... am I correct?
There can never be a serious downturn again. That 1968 level would trigger massive QE announcement. It's my contention that even if the economy remains weak for the next 10 years the Dow will hit 250K and XIV will go to 150,000.
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I believe we will see somewhat flat or downturn market toward FOMC on 9/17/14. Fed will give some market directions before the end of QE. I believe VIX spot has been flat (11.5 to 13) last several weeks and, accordingly, XIV price has been flat. However, we will see some XIV price movements before the end of QE,
I agree with you since it's been trading sideways for a month or more now. Time to go up. This trade is more crowded now thought too, and that may factor in.