Recently there’s been more talk and trading of certain ultrashort ETF’s on our trading desk. It seems as the downside move in SRS from over 270 was missed and it cracked 100 that the popularity rose as maybe a trade-worthy stock. So, though I am not certain of this, the stock seems to be more heavily traded at these prices, but probably for good reason.

Understand that as a momentum trader myself, I thoroughly enjoyed the reckless behavior of SRS above, say 130. Trading the stock with more than 400 shares was just crazy, as 100 and 200 shares was more than enough to be able to safely manage risk while at the same time taking great profits because of the constant 2 to 4 point moves. The stock was consistently up or down over 25 points, and with light volume and well placed trades you were making a very good profit. Levels weren’t much of a concern because the stock was trading in realms it had not seen before. And because of that you were not even overly concerned with your price, rather that you were on the right side of the ensuing 4 point move. As you were in a profitable trade, the mentality was not that “maybe I should cover that this price because of resistance”, rather that “I should cover here because I am 3.50 pts in the money and any more is just greed”. And that, my friends, was great.

Fast forward to present day. SRS has sold back down below 100, and is trading at a dismal $60 as I write this blog. The spread is a simple 2 to 5 cents, and size is actually acceptable to trade with. It has garnered attention as a stock below $75 that still moves, and I have to listen to even the most simple minded trader’s thoughts of where it might go to. Save for a random 1 1/2 point move, it is almost, near, normal. And now disgusting. Maybe not disgusting but definitely not fun anymore. And the reason is probably related to the fact that as this market is finding some footing, a real estate “ultrashort” may not be the hot topic as the fed cuts rates and buying opportunities start to become more prevalent.

All that is probably another topic which I may touch on later. For now, I prefer to use the idea one of the Joker’s monologue in the recent “Batman, Dark Knight”: “Introduce a little anarchy, you upset the established order, and everything becomes chaos. I am an agent of chaos. And you know the thing about chaos? It’s fair.”; Chaos = market volatility with SRS as a prime example? Yes sir. Those were the good times. That unsure recklessness that fills a day of trading with the emotion of bid hitting, or in the case of SRS, paying 50 cents through to get long. Those are my days of good. Someone took the face paint and lipstick off of SRS. Because all of this normalcy? Feel free to shove it.