tsptalk's Market Talk

[tsptalk]

When will the 10% pullback hit? It’s overdue.

??

Odds of a government shutdown at the end of the month increased this week

Congress teeters toward shutdown with Democrats vowing to oppose stopgap

Odds of a government shutdown at the end of the month increased this week as Democrats vowed to oppose a stopgap spending measure to keep the government open.

nbc16.com

I keep bringing this up. I'm not sure how we can ignore it...

https://twitter.com/x/status/1967272382218883392

 

[Zapple]

Wow. What's this guy's track record? Small caps have certainly lagged the last several years, but have been doing relatively well this year. Thanks for sharing this info. Of course, it could simply be a short(er) term trade. We're now in a historically weak seasonality time of the year. I'm very cautious in my outlook. A 10 to 20 percent pullback (or even more) would not surprise me and would set up nicely for a year end rally. Who knows?

 

[tsptalk]

That TZA trade was started on Aug 21 so it's certainly underwater right now, but being a member of the House Financial Services Committee, I would sure be interested to know if he still holds it.

 

[bmneveu]

TZA was trading between 10.22 and 10.57 on Aug 21. Yesterday it closed at 8.15. So he's down about 20% ($43K) on that trade so far, if he's still holding it.

 

[JTH]

That TZA trade was started on Aug 21 so it's certainly underwater right now, but being a member of the House Financial Services Committee, I would sure be interested to know if he still holds it.

TZA was trading between 10.22 and 10.57 on Aug 21. Yesterday it closed at 8.15. So he's down about 20% ($43K) on that trade so far, if he's still holding it.

Yes, I too was somewhat perplexed by this trade. Most of my active trading is with the leveraged ETF's, I forget the stats, but I've crunched the numbers on the TNA/TZA pair, and it's just not good. The higher the daily volatility, the faster the drag, that April correction ripped a good hole.

Based on the 21-Aug Close, TZA needs to rise 26% from last Friday to get back to break-even. That 26% level is above Standard Deviation 3-Resistance on the 63-Day Linear Regression Channel. So basically he needs R2K to go up 8.66% just to break-even.

Case in point, a sample of just how bad the Volatility Decay was for the April Correction.

• The Bullish TNA is 9.81% YTD while the Russell 2000 is 9.80% YTD
• The Bearish TZA is -37.16% YTD while the Short Russell2000 RWM is -10.25%
  • The performance between TZA/RWM is 3.63X YTD

 

[tsptalk]

Yes, good lesson - avoid holding leveraged ETFs for long periods of time. They are great if you find a strong trend or turning point, but waiting for a losing trade to get even is a tough business with these, especially 3X'ers.

 

[tsptalk]

It's a post expiration Friday and the market is looking for direction. Stocks are off to a slow start to begin the week. The major indices are mixed but mostly flat. Yields and the dollar are also flat with yields just slightly up and UUP down slightly.

Gold is up big, oil is down, and the cyptos are falling this morning.

Coming across the wire now:

St. Louis Fed President Musalem sees ‘limited room’ for more interest rate cuts

St. Louis Fed President Alberto Musalem on Monday reiterated his support for last week’s interest rate cut but said he is wary about going much further.

“I believe there is limited room for easing further without policy becoming overly accommodative, and we should tread cautiously” on further reductions, he said.

https://www.cnbc.com/2025/09/22/st-louis-fed-president-musalem-sees-limited-room-for-more-interest-rate-cuts.html