What would be the stop for SOXL? It is down today compared to the other ETFs.

Published : September 8 2010 at 12:15 ET

The stop for SOXL or any stock or ETF depends on your maximum stop loss. Some investors set it at 7-8%, as recommended by O'Neil. Others may set it slightly lower or slightly higher depending on their risk tolerance levels. SOXL is one of the more volatile ETFs. We bought it when the MDM issued a buy signal on September 1, so it is still showing a small gain. Our options going foward are that we continue to hold it, or switch into a stronger performing ETF, or scale out entirely, depending on market conditions. In general, we prefer to keep maximum stop loss anywhere between 5 to 10%, depending on the volatility of the instrument. In practice, we often sell before it reaches this maximum point.

SOXL is down today because Intel (INTC) was downgraded today to neutral. Some semiconductors are moving into new technological realms such as cloud computing while others such as INTC are slower to make that move. Thus the SOX index, while being one of the more volatile ETFs thus poses larger upside than other ETFs, could also lag over a longer timeframe. Switching out of or halving ones position is certainly an option.



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