David; The DIA is the DOW Diamonds, it trades on the AMEX and
tracks the DOW, ( very close ) it's a way of buying 1/10th the Dow value, so when you buy and sell it you are in effect trading
a compete basket of the DOW 30. The SPY lets you buy or sell
all the stocks in the S&P 500, the MDY is the S&P midcaps.
For me trading these, are the primary reason I got into
market timing. ( also it's Diversity for the poor man ).
With the SPY I in effect trade 500 stocks for a $12 commission,
it's the biggest trader on the Amex, and is likely the largest
source of the program trading we see, as it tosses buy/sell
programs at the market to balance the flow into or out of it.
All in all these baskets are not as risky as picking individual
stocks , here a sense of market timing is key to catching
some upside while pulling out of the down side.
I'v tried shorting the SPY, and found that not as lucrative as
just catching upside , you might would think it would be
but if you get into it real time you will find it's harder
than it looks on paper. It's hard enough trying to stay in
front of the curve with the buy/sells. Short orders (limit )don't
always fill, and if you do at market they might fill considerable below what you had in mind. The specialist are going to get the
better deals on them, always.
Jim
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