ETF Trading Research 5/07/2018

Posted May 7, 2018

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

I thought there would be more of a shake up over the weekend and there were no Trump Tweets to help out TVIX get going. While it did test the lows today and I didn’t have us just sell it because it was down for the day, we held on and it went positive but closed down a hair. I think we get one more sell off we can load up on with TQQQ, LABU and SOXL so didn’t chase again today. It might be our last time getting them lower so we’ll go in 1/2 shares at a time and see where we might grab those shares based on price action. In the meantime, we’ll see what we can get out of TVIX and maybe add SQQQ, LABD and SOXS for scalps. I want 5% minimum from TVIX with a goal of 10% to sell 1/2.

Economic Data For Tomorrow

Powell is speaking at

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

Stock Market

Market is a bit over extended I think and after hitting that 2680 resistance area fell 17 points rather quickly. Any move up in the morning I think will be short lived. /ES hit 2681.50 but now would like to see it break 2660 once again and get us one last smackdown so we can get long the market. I’ll be more aggressive with a short call this time though. We are already long TVIX in anticipation, but have to get TVIX over that 6.82 resistance and up over 7 again. USD/JPY is doing its job under 109 after hours.

Foreign Markets

Foreign ETFs are weak overall and I pulled the plug on BRZU which after our hedges with BZQ last week we lost -5% overall on but I didn’t put on that 3rd hedge on Friday and should have. It did fall more and we would have been down over -10% and I can’t do that without a hedge but didn’t feel confident enough to call BZQ when the markets were up so much. Happy to be out of these for now. They have given us good profit the last few weeks on the long side, and now we may have to look short with them green on the weekly. We should have end of last week.

Interest Rates

TMV took the place of TMF. These two can’t get more than a 2 day trend. Neutral here.

Energy

If I had any guts would have called DRIP when I mentioned it after being down -10% for the day. At least it did get some of you profit who bought it at the lows there, whether on your own or with my mention. Good job in taking the risk.

Nat gas rose to begin with and that sharp move down we could have probably bought. I did mention it at one point and it moved higher but I didn’t have the confidence.

Precious Metals and Mining Stocks

I’ll repeat what I wrote in last night’s report. “Expecting more of a dollar fall and thus gold/silver/miners rise. We’ll see what we can get out of this, sell 1/2 and ride the rest with a trailing stop.” Dollar was up today and overbought.

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