3x inverse funds as a contrarian indicator
Updated
3x inverse ETFs let you use leverage to bet against stocks. This chart shows the 14-day Money Flow Indicator (MFI 14) on a 3x inverse semiconductor fund (SOXS). SOXS is an inverse leveraged bet on the SOXX semiconductor ETF, which is also shown on the chart.
Interestingly, the flow of money into and out of SOXS has often been a contrarian indicator of where SOXX is headed. SOXS gets big inflows just as SOXX hits bottom. It gets big outflows just as SOXX hits top. If you do the opposite of whatever SOXS traders are doing, you can do pretty well.
SOXS made a peak on Friday that may imply that SOXX has bottomed and will begin to move up. Short SOXS or long SOXX would be the play here.
Interestingly, the flow of money into and out of SOXS has often been a contrarian indicator of where SOXX is headed. SOXS gets big inflows just as SOXX hits bottom. It gets big outflows just as SOXX hits top. If you do the opposite of whatever SOXS traders are doing, you can do pretty well.
SOXS made a peak on Friday that may imply that SOXX has bottomed and will begin to move up. Short SOXS or long SOXX would be the play here.
Note
Big +5% day in SOXX today as bond interest rates pulled back.
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