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Strategies & Market Trends : Trading SPY and DIA for Fun & Profit

SPY 679.96

-1.1%

4:00 PM EDT

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To: Dnorman who wrote (83)	12/20/1998 2:34:00 AM
From: James F. Hopkins	Read Replies (1) of 130

Dnorman; I have bought both SPY and The MDY at times, and shorted the SPY once, my trades cost $12. I have not hedged them yet as that was mostly thinking out loud. Another way to do it is to buy into a noload S&P index tracking fund, such as DSPIX, ( There are many more, and they also step right with the index ) With some of them I pay no load and no fee. Also I can buy exact the dollar amount in an index fund to balance a short on the MDY and I can margin. ----------------- I just happen to have an old paper portfolio that goes back before the July sell off to May 13th of this year. Now without touching it in any way had I been long the S&P index via any of the funds, and short the MDY the return would now be 11.48%..I know that don't look like much but that's a hands off rip van winkel approch..it's a gain of 6.19% on the long and 5.29% on the short. I could have and in fact I did beat that, while I wasn't using the long/short approach ; legging in and out. I think if I had I would have done better yet. --------------- Symbol Last Trade Org Trade Date Gain from 13-MAY ^SPX Dec 18 1188.03 13-May-98 $6.92 +6.18% SPY Dec 18 118 1/2 13-May-98 $6.28 +5.60% VFINX Dec 18 110.85 13-May-98 $6.85 +6.59% DSPIX Dec 18 25.20 13-May-98 $5.88 +6.19% MISAX Dec 18 15.65 13-May-98 $5.28 +5.96% MUXAX Dec 18 25.36 13-May-98 $4.76 +4.92% SCPIX Dec 18 15.90 13-May-98 $5.88 +6.57% SINEX Dec 18 15.00 13-May-98 $5.76 +6.84% PEOPX Dec 18 35.48 13-May-98 $6.78 +6.80% ^MID Dec 18 354.39 13-May-98 -$5.49 -4.91% MDY Dec 18 68 13-May-98 -$3.80 -5.29% PESPX Dec 18 27.42 13-May-98 -$5.24 -4.56% ^DJI Dec 18 8903.63 30-Jun-98 -$0.48 -0.54% WDOWX Dec 18 8.90 30-Jun-98 -$0.50 -0.56% ------------- BTW PESPX is a no load MID cap tracking fund, and WDOWX tracks the DOW30 ( very close ) Thing is I don't think I can short those funds, but I know I can short the MDY..and on any substanual down turns it falls more than the SPY or S&P500.. ------------- My thought is when in doubt be long one, short the other, but leg out of one once your convinced of a trend. The style gives you an edge. Even a hands off approach should be good for an easy 10% a year no matter which way the market moves. Jim

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