Our "MR. SMITH GOES TO WASHINGTON" trade (XIV) performed exactly as thought- An initial bump on the debt news and then a sell-off. We considered dumping it at the open; however, decided against it. The S&P500 is almost touching it's 200-day Moving average and the relative strength is in the low 30s. The news is horrible on the ISM front and it looks like the world is falling apart. Our natural instinct is to bail or short the market. What did we do? WE BOUGHT MORE. The Dow 12,000 level is so important and I don't think anybody (those that are really bullish but don't want to show it) want to break it. The XIV is holding up extremely well considering all the negativity. The average share volume is about 4 mil and it has already traded 8 mil. Mind you this ETF is based on short-term futures and it appears to me that there is a LOT of buying here. This is pure instinct; the human side says its scary to buy in here- the world is falling apart.
We now own twice as much and our cost basis is RAISED to $15.64
I have faith in MR. SMITH and more important- it looks very fishy in here that the market would sell off while people are hoarding the XIV.
