What about 2011—will it be a replay of 2005?

Since November 2009 I have been noting that the S&P500 (represented here by SPY) has been closely retracing the path that it followed in 2003 and 2004.  Now that 2010 is drawing to a close, I took a look back at 2005 to get one vision (hallucination?) of what lies ahead for 2011.  My updated graph showing SPY, normalized SPY volume and VIX over those …

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The tale of two rallies

SPY’s 2010 price path for the 8th of October is about 3 points higher that the 2004 trend top line, but that is consistent with 2010’s considerably higher volatility. Recently there have been articles noting relatively low trading volumes, but compared to the normalized volume in 2004 (which at an absolute level was about 3.5x lower) volumes don’t look out of line. The rally that …

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Six years and a point apart

The surprising day-to-day correlation between SPY in 2004 and SPY in 2010 continues.  The 21-September closing values were 112.96 (2004), and 113.98 (2010)—not exactly a rousing endorsement of buy-and-hold strategies. This year’s SPY has traded below the old SPY line since mid August, but it just crossed over, challenging the top 2004 trendline (see below).    It appears that the scary months of September and …

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Dealing with the dividend when you have a short position

What if I’m short a security when it goes ex-dividend? You are on the hook for the dividend if you are short the stock/ETF when it goes ex-dividend.  It will be subtracted from your brokerage account on the distribution date.  You borrowed the stock, you are responsible for paying the owner of the security the dividend. More questions on dividends?  See Top 10 questions about dividends.

Dividend capture by buying SPY and shorting IVV?

If your devious dividend capture plan involves you hedging against SPY’s price movements by selling IVV short until after SPY goes ex-dividend you can forget about it. The IVV (Barclays Global) price doesn’t drop by SPY’s dividend amount on SPY’s ex-dividend date. It continues to track the S&P 500 until it goes ex-dividend a few days later. Your master plan will net out with you …

Read moreDividend capture by buying SPY and shorting IVV?