Welcome to 11,000. Thanks for coming. It looks like we are headed back below 11,000 at least to begin the day. Yesterday, I opened up a position in Advanced Micro Devices (AMD) with our Play of the Week. We liked this stock to grow throughout the week on Intel buzz and some good market conditions. We opened a position at 9.42. Today, we are looking at a strong ETF play to take advantage of the declining market and a solid retail short sale.

Let’s get to it…

 

Buy Pick of the Day: Direxion Daily Real Estate Bear ETF (DRV)

Analysis: Our decline from 11,000 will open up an opportunity for a single day trade in Direxion Daily Real Estate Bear ETF (DRV). This ETF follows a group of REITs that are retail and diversified. Yet, it often is strongly impacted by the residential construction industry and other financial information. Today, the market is looking to pull back. To start, last night we kicked off the earnings season with a miss by Alcoa Inc. (AA). That brought down futures in the market before 8:30 AM to around 20 points. At 8:30 AM, the poor news continued with the trade balance declining to a $39.7 billion deficit in imports over exports for the month of March, which was a $2.5 billion increase from February. The Import Price Index also came in below estimates, which is more fuel to the fire.

The market is definitely looking prepared to pull back, and it has the capability to extend throughout the day. Aloca really did not help the market by reporting disappointing earnings because it means that analysts, at least for one day, will be expecting weak earnings across the board. I think the DRV play is more the market is falling, and we have an inverse ETF that is 3x that should benefit from it. 

On the REIT and real estate sector, there was not really any exciting news that would move DRV, so this is basically a play on the market direction. Futures have continued to rise throughout the morning, which is not what we like to see if we are playing an inverse ETF. Yet, I am going to stick behind my reasoning that DRV should fall. Asia and Europe were both down for the day. It is hard to hold such a benchmark like 11,000. Even looking at upgrades and downgrades, there are way more downgrades…
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