ETF Trading Research 4/25/2018

Posted April 25, 2018

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

We can thank BoJ for ramping up the USD/JPY today and Facebook after hours for good earnings. Amazon on deck.

First off, on extreme moves like we had today, both down and up, you can typically ignore the new red weekly in FAZ. Also, UWT for the 3rd time has turned red on the weekly, so once again we can look to buy DWT tomorrow, but even if “3rd times a charm,” I am twice bitten and thrice shy.

This morning I know was rough to sit through. We came close to the 2610 next support level that I first wrote about April 20th when we first hit 2660, 5 days ago. I said then; “This is a support level at 2660. Next support is 2610. We fell almost 40 points from high to low today, so Monday we could possibly get one more swing lower. Just because that might be a possibility, I am refraining buying at this support (although in the back of my mind I am saying do it!). I think the prudent thing to do is wait till Monday.”

We did do that and they brought us down to 2611 and now we are at 2651.50 after hours. Have we bottomed? I don’t know. What I do know is this:

Downside, if it were to come, is 2570 to 2600. We hit 2611.25.

Here’s how I look at it;

If we fell to that even from here at 2651.25, that’s at worse an 80 point drop.

But the gain on the upside is to 2800 or even 3000 potential as I see it. Maybe higher. That’s 150 to 350 points higher.

You still have a lot of upside and chances to get in no matter what we do (far right column).

Economic Data For Tomorrow

Core Durable Goods Orders and Draghi speaking tomorrow the big news.

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

Stock Market

Like the reaction off of the lows and we’ll see if we get continuation into Friday after Amazon reports tomorrow. The worst may be over but downside versus upside is in our favor and May is all I care about. That and double digit returns.

Foreign Markets

We bought YINN today and are now fully loaded for the next move up in RUSL, BRZU and YINN. They may outperform SOXL, TQQQ and LABU when it’s all said and done. We’ll see when we get up 100 points more in /ES where we are. Ignoring RUSS as green on the weekly too, although technically this can be an oil related trade too and the oil storage data was negative today.

Interest Rates

Rates shot up again today but even if they go higher now, it may not hurt the market too much. We will begin to fall and go under 3% and market should zoom up higher. TMF is the call here either way and anyone can cost average into it with confidence.

Energy

Bad oil data and DWT/DRIP both fell today. Glad we stayed away and concentrated on our other trades. I still like them for a move but over 9 and staying over 9 is the key. Until then, they are range bound.

DGAZ I like our odds for a pullback in Nat Gas.

Precious Metals and Mining Stocks

Took the profit from JDST even though I thought we can still go lower in gold to low 1300s, but Draghi may mix things up a bit. The dollar is close to resistance at 91.25 (91.30 resistance) and we have to be careful with the shorts at least until Draghi is finished. I am still in the camp that when the stock market takes off, gold and silver and miners may take a hit as investors rush into tech and biotech again. That’s group think at work and this earnings season has done nothing to disappoint. Keep that in mind. Ideally, we get back into JDST again and ride it higher as gold and silver get everyone bearish who was just bullish last week.

Green Weekly’s

These are the ETFs that have turned green on the weekly and show a trend has developed. Your best way to profit with the service is stick with the green weekly trend each day and take profit while using a trailing stops. 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 more likely it is to turn red on the weekly and the opposite ETF comes into play as a long. This will be tracked more when we automate the service.

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!

Wait for the sign of a positive day to go long anything beaten down, I think the odds swing to your favor.

New way to trade beaten down ETFs; The way that trade would work, and I really think it should be a rule from now on NOT to trade anything trending down until it reverses, is we would buy at the open if it is POSITIVE or GOES POSITIVE during the day. Then we would look to profit on 1/2 shares over and over, day after day until we get the red weekly signal on the opposite trade that could turn into bigger profits. The stop would be if it goes negative for the day. The rule of keeping a stop if it goes negative for the day is a must. Lastly for this type of trading we need to not be afraid to get back in if it goes positive once again. Sometimes market makers will take an ETF negative and then reverse it right higher again because they know if it goes negative many exit. So we have to be willing to risk a few in and outs when it does this up and down move around that potential stop out area so we don’t miss the ride back up. That’s just part of trading and not a big deal. But no matter what, if it breaks to yet another lower low because you didn’t get out after giving it a little more wiggle room, you are more than likely further from the original stop out when it went negative and you are out, waiting for it to go positive again before you get back in. You are simply buying into strength.

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.

Doug Eberhardt