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On Thursday, RYJHX dropped -8.34% and another -5.50% on Friday. There was nothing in a chart to forecast those moves. But between 02/26/08 and 05/24/13, RYJHX has had similar, one-day, percentage moves. So Thursday’s and Friday’s moves can’t really be called ‘Black Swans’ in Taleb’s sense of the term. Nonetheless, traders need to protect themselves against them.


-16.5% 0
-16.0% 1 0.1%
-15.5% 0
-15.0% 0
-14.5% 2 0.2%
-14.0% 0
-13.5% 0
-13.0% 2 0.2%
-12.5% 0
-12.0% 3 0.2%
-11.5% 1 0.1%
-11.0% 1 0.1%
-10.5% 2 0.2%
-10.0% 1 0.1%
-9.5% 1 0.1%
-9.0% 2 0.2%
-8.5% 4 0.3%
-8.0% 5 0.4%
-7.5% 2 0.2%
-7.0% 3 0.2%
-6.5% 3 0.2%
-6.0% 7 0.5%
-5.5% 3 0.2%
-5.0% 13 1.0%
-4.5% 12 0.9%
-4.0% 17 1.3%
-3.5% 25 1.9%
-3.0% 32 2.4%
-2.5% 57 4.3%
-2.0% 57 4.3%
-1.5% 77 5.8%
-1.0% 85 6.4%
-0.5% 103 7.8%
0.0% 105 7.9%
0.5% 134 10.1%
1.0% 110 8.3%
1.5% 98 7.4%
2.0% 104 7.9%
2.5% 63 4.8%
3.0% 53 4.0%
3.5% 34 2.6%
4.0% 21 1.6%
4.5% 15 1.1%
5.0% 7 0.5%
5.5% 10 0.8%
6.0% 5 0.4%
6.5% 9 0.7%
7.0% 4 0.3%
7.5% 6 0.5%
8.0% 3 0.2%
8.5% 1 0.1%
9.0% 3 0.2%
9.5% 1 0.1%
10.0% 2 0.2%
10.5% 2 0.2%
11.0% 1 0.1%
11.5% 0
12.0% 1 0.1%
12.5% 2 0.2%
13.0% 1 0.1%
13.5% 1 0.1%
14.0% 0
14.5% 1 0.1%
15.0% 0
15.5% 0
16.0% 1 0.1%
16.5% 0
17.0% 0
17.5% 0
18.0% 0
18.5% 0
19.0% 1 0.1%
19.5% 0
20.0% 0
20.5% 0
21.0% 0
21.5% 0
22.0% 0
22.5% 0
23.0% 1 0.1%
23.5% 0
24.0% 0
24.5% 0
25.0% 0
1321 100.0%
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Charlie,

Gonna guess the charts gave at least one days notice and according to Simon SEZ gave a loud signal on the 23rd way ahead of everybody.

My Track 'n Trade chart shows the RSI arrow pointing to May 23rd as a sell date. Also way back on May 16th, the RSI gave a sell signal.

EZJ/EWV......YCS/YCL Tetter Totter plays.

http://stockcharts.com/h-sc/ui?s=EZJ&p=D&yr=0&mn...
http://stockcharts.com/h-sc/ui?s=EWV&p=D&yr=0&mn...

If you liked the Japanese funds then you will like the following which is doing better than U.S. UUP/UDN tetter totters.

http://stockcharts.com/h-sc/ui?s=YCS&p=D&yr=0&mn...
http://stockcharts.com/h-sc/ui?s=YCL&p=D&yr=0&mn...

Quillnpenn
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Quill,

It’s not a matter of liking (or disliking) Japan funds. RYJHX (which happens to invest in Japan) is merely an instance of a larger, broader problem. If an investor/trader is long (or short) a security, and prices are bobbing along within a tolerable range of variation, up a bit some days, down a bit some days, but mostly moving in the direction of the bet (be that long or short), how does one protect against bigger than expected, adverse moves that come out of the blue? There was absolutely nothing on Wednesday in the chart for RYJHX that warned of the drops that happened on Thursday and Friday. As the following table suggests, prices for RYJHX were up on Wednesday, not down, as they were for EWJ.
  
F M T W T F
17-May 20-May 21-May 22-May 23-May 24-May

EWJ 12.11 12.19 12.26 12.13 11.62 11.41
0.66% 0.57% -1.06% -4.20% -1.81%

RYJHX 22.19 22.45 22.83 23.02 21.1 19.94
1.17% 1.69% 0.83% -8.34% -5.50%

But as you shrewdly point out (with your chart for EWJ), info relevant to trading RYJHX could have come externally. But, also, that’s doing something I was hoping to avoid. I wanted to be able to trade open-end funds on their own merits without having to also look at other vehicles. I intend to figure out how to do that.

Charlie
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To have got in around mid-April and exited at Friday's close would put a buyer of EWJ about flat. But a buyer of RYJHX would still be be up around 10%. Part of the explanation is that RYJHX is a 2x fund, and part is the derivatives that RYJHX is using. They got it wrong Wednesday and did the correction the next day.

http://finance.yahoo.com/echarts?s=EWJ+Interactive#symbol=ew...
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