Market Outlook Jan. 7th, 2009

Well, I guess those who have the ETF Ultra Shorts SDS and TZA are backing off of their complaints. Today SDS has gained back about 5.7% and TZA has gained back 10.5% today. I would not sell either of these as we are headed down. We closed yesterday at 9015 on the Dow, 934.70 on the S&P500 and 1652 on the Nasdaq Composite. I expect us to go lower over the coming days. Expect the Dow to go down at least another 500 points this week, from where we are now (8777). I expect the S&P500 to go down below 880 and we may test the lows at the bottom of all indexes in the next few weeks. For the S&P 500 that would be 750 at the lows. On the Dow that would be 7300. When these Indexes go much lower, look to start selling SDS if it hits 95 or above. I calculated that sell price by looking back at the charts and subtracting the $11.50/share (pay-out they made to shareholders in the past few weeks) and looked at a reasonable return from the previous highs of $130/share when the market bottomed. I don't know what your average price per share is and so assuming it is about $75 for some of you, if you could sell at $95 that would be a 27% return. If you added to your shares it will be even lower in price due to averaging your costs down, it will an even larger rate of return.

TZA is similar in that the profit potential is even greater. If your average price is about $60 you would consider selling this ETF at about $85. That would yield a 42% gain minimum. Today the share price has gone from its close yesterday of $42.86 to currently at $47.82 at 11:45am PST. for a gain today of 11%.

I purchased Apple Computer stock when it was $86.50 and while it has gone up to $93.02 at the close yesterday, I will be adding more shares if it goes back down to my initial purchase price or lower.

Good fortune and keep checking back, as I try to update daily.