ETF Trading Research 10/5/2017

Posted October 5, 2017

For those of you new here, I most of the time have the ETF Trading Research report out by 8PM PDT, and it comes by an RSS feed, but you can look at the report here sometimes before you get it in your mailbox; https://illusionsofwealth.com/category/etf-blogs/ This is also the same link if there are any technical difficulties.

Today’s Trades and Current Positions (highlighted in yellow):

Going to repeat what I wrote yesterday again here:

We are going to start implementing the new strategy of when an ETF turns red on the weekly, to take the other side of the trade immediately, rather than wait for the green weekly. I think we can scalp half shares quickly over a day or two hold and use a trailing stop to make sure we lock in profit. Rarely when we have a red weekly hit, do we get an immediate reversal. Also, no more messing with red weekly’s and staying long the opposite trade. These are hard rules that will allow you to get out of one either with profit if you haven’t taken it already (one that was a green weekly and turned red), and get into the other side. Just go back and track it yourself. The only ETFs it hasn’t worked on that well, were the foreign ETFs and the regular stock market ETFs when we traded them. But here are the candidates that we should be licking our chops over in the near future when their opposites turn red;

RUSS, YANG, BZQ, DSLV, DGLD, LABD, UVXY, FAZ, UGAZ, TMF (some of these we are of course already in).

The real winner of this group should be UVXY, once SVXY turns red on the weekly.

To think I could have been doing this all along. If you read the nightly report that I send out I do mention touch on it (below), but have never implemented it.

I also want to emphasize something I put into each nightly report; Sell half shares on a spike up on any ETF you are long, even if goal is higher. Spikes higher are almost always followed by moves in the opposite direction. If you would have done that this morning on USLV, UGAZ, UWT after the data, and UVXY, you would have come out nicely. I am really considering doing this every time without question, no matter what our other goals are. Selling half shares on these spikes just make sense. I even put a sign up recently that sits in front of me. It says “Always look good for the service.” If I look good for the service, then we are all constantly taking profit. If I sit on trades and get greedy, then we can see pullbacks, which we did in USLV, UGAZ, UWT and UVXY.

Do a screen shot of the above 2 paragraphs and start taking more profit. It’s like the tortoise and the hare. The hare doesn’t win the race. Slow and steady profit does. There will still be some home runs possibly on half shares or in the futures. But I want to start doing these 2 things above more consistently as I am tired of days that we have had since Friday where we get no follow through.

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If you followed the second piece of advice above today, you would have sold UGAZ, and if you were long UWT on those spikes we had today, at least half shares. We sold right before the UGAZ spike and yes, it did go higher, but then fell as UWT fell about 50 cents from that spike too. Food for thought moving forward. I am pretty confident we should just do this every time based on what I see market makers are capable of. One, we can always add shares to a winner if it continues to go up. Our psychology tells us to hold as we want more. Just taking the profit though is what will build your account.

Economic Data For Tomorrow

Non-farm Payrolls is the big one tomorrow.

http://www.investing.com/economic-calendar/

Stock Market

Good news for a potential UVXY trade is that it is 2 days on the cold corner.

TQQQ turned green on the weekly but I think it is only a buy if it opens higher and being that it is the last to trigger long out of the stock market long ETFs, it is a weaker trade right now, especially with the S&P up 8 days straight, the first time it has done so in 4 years.

We have very good odds, especially with all the hoopla about the markets, that we are close to a top in the markets. What will be the trigger to get the reversal? We’ll have to see, but all the signs of a black swan event with the year ending in a 7 and us being in October is there. One of those bears on the market I spoke of in another alert said the reversal should have started last year. This is unprecedented moves in the markets and unprecedented moves down in the VIX without a reversal. It will come.

Foreign Markets

YINN was higher again once again today moving up another 4.61% (we should be in it for about 10% now using the new buy the opposite of any ETF that turns red on the weekly. RUSL was up too, however, BRZU started the day higher and then went red for the day. I wrote yesterday; “I would think a reversal in these is coming sooner than later. Last time we caught some of the reversal. This time we will catch more profit from them with the new strategy. Just be patient for it.” Our first trade here might be BZQ turning red on the weekly. It is too aggressive a trade to buy BZQ now, but today’s reversal in these should put BZQ on your radar.

Interest Rates

TMF was up today, but not by much. Close to a stop out but rebounded.

Energy

There will be a lot of short covering in Nat Gas once we get over 3.0 the next time on a move up. Take a look at the table below and you’ll see the potential when these big money players have to cover. Today was a typical market maker move of selling the bullish data and bringing it down. Luckily (or smartly) we sold 1/2 shares for a 4.38% gain before the data. We also added at 10.70, which I might have been a little early on the add, but definitely still a bull on NG. That said, I do have a stop on the day trades of 10. If we open lower than 10 or see that number pre-market, our buy back is 10.10 on the way back up. I know some are holding through thick and thin, and that may be good too. Everything smells of a big move in nat gas here and 3.00 broke then 3.10 and 3.40 is up next. DGAZ a new red weekly and for those of you following the rule from yesterday, waiting for a time to buy, that move up in UGAZ today is what triggered the red weekly for DGAZ, but what a reversal. Somewhat of a false flag signal in this case, but I think the entry anywhere close to 10 is good.

Oil is looking decent now with both GUSH and UWT triggering. There can still be news that affects oil, like OPEC or something, but that’s part of what you have to accept trading oil. The downside can still be 49.22 area but I see 54/55 in our future no matter what. It’s like catching the bottom in gold right now. But the fact we have green weekly’s, and metal’s/miners don’t, lets me know that buying any dips in GUSH or UWT is going to work out for us.

Precious Metals and Mining Stocks

Little weakness in metals and miners today. I said over 112.92 in USD/JPY and JDST may come into play but some some of you might have scalped JDST once JNUG fell below 18.50. We only hit 112.87 as a high on USD/JPY and it is presently 112.83 ask. JNUG support at 18 but that won’t matter if we get a good non-farm report tomorrow.

There is a chance we get a washout overnight here and into the Non-farm Payrolls data in the morning. By Monday we should be off and running in metals and my early call is JNUG/NUGT/USLV to be the trades of the week, but I might have to extend UVXY to next week now also. DSLV a red weekly tells us that USLV has a good chance to move up using our new strategy. USLV also being lower like UGAZ, gives us even more a fighting chance tomorrow. But data will play into this.

Thursday Afternoon Price

Wednesday Afternoon Price

Hot Corner (the biggest movers – 3% or more – or new ETFs that are green on the weekly – those in bold are consecutive days in the Hot Corner):

UWT, YINN, JDST, DGAZ, SVXY

Cold Corner (the biggest move lower 3% or more that are green on the weekly and or weekly/monthly or turned red on the weekly – those in bold are consecutive days in the Cold Corner):

UVXY, DWT, YANG, JNUG, UGAZ

Green Weekly’s

These are the ETFs that have turned green on the weekly and the dates they turned green. This is used for tracking your percentage gains so you know when to take profit for each ETF per the Trading Rules profit taking guidelines. These green weekly’s work as you can see from the %Gain/Loss tables. You won’t get the exact high with your trade but you will also be out typically well before they start to fall again or turn red on the weekly. Your best way to profit with the service is stick with the green weekly trend and take profit while using a trailing stop on remaining shares. Also, if these green ETFs are up for the day at the open, they offer the best scalping opportunities. I am always fine tuning this section so if there is confusion at all, email me and be specific and I’ll be happy address.

I know I have said this many times but it is worth repeating; If you stick with the green weekly trades your odds of profit increase as there is more risk with the day trades. I call the day trades with the intent of catching some runners, so will get a few 1% stop outs but eventually catch the 5% to 10% or more runners. The important part of the list below is that the longer the ETF stays on the list (the one’s at the top of the list by Entry Date) the more likely it is to turn red on the weekly and the opposite ETF comes into play as a long.

Sell half shares on a spike up on any ETF you are long, even if goal is higher. Spikes higher are almost always followed by moves in the opposite direction. Try and get out with a market order quickly before the quick move back lower. Lock in that profit!

Doug Eberhardt