ETF Trading Research 6/04/2018

Posted June 4, 2018

What goes down, must come up. That’s where we are with some of the trades now, and my insistence in staying long for bigger profit. I may have to curtail my insistence though. I don’t want to use insurance strategies when we should be on the right side of the trade. I do think though, that we are on the right side of each of these with what I see coming into July. Let’s take oil for an example.

DSI (Daily Sentiment Index) fell to 5 its lowest level since Feb 12th.

DSI trumps most everything else.

Here was the price action back then? You can see that tomorrow, should we go lower, would be about the bottom for UWT. You might get a scalp in DWT tomorrow, but that’s about it. Same would go for DRIP as insurance for our long trade. Hopefully we just pop up, but you can see some similarities in DWT from Feb 12 and the subsequent move higher.

That news by the way is out and priced in. What if they don’t do it? Some other food for thought about non-compliance too. https://thediplomat.com/2018/06/will-opec-ease-production-cut-agreement-early/

Markets we are buying the dips and have room to buy TQQQ and SOXL on any dip. Look to take some 3% to 5% profit on first 1/2 shares in LABU as we move towards /ES 2780 (will not wait for it to hit exactly but be out before that on any spikes).

BRZU making the comeback and up close to 5% today. DGAZ the same as it’s on it’s way to 2.53 possibly.

Metals and miners are still a good buy and just waiting on the dollar to crack and stay below 94. It started out good today, but failed once again. It did however end the day negative. Check out the DSI for gold and silver. Mark my words when I say DSI will be back in the 80’s this summer. It is the run to that price where we get the bulk of our profit. It’s coming.

Economic Data For Tomorrow

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

Stock Market

We almost broke 2750 today and I missed calling SOXL on that dip negative by a hair as it went positive again by the time I looked up. 2775 is the ideal spot we are looking for but might have us out at 2770 should we get there and no trouble by Trump Tweets or White House action. TVIX is still a hedge and got hit hard and will continue to get hit. As I said, at some point we will get 100% from TVIX. I personally can’t wait.

Foreign Markets

BRZU and YINN continued higher. Nice to see. They really should take off once dollar breaks down though.

Interest Rates

Neutral here still to slightly leaning TMV.

Energy

I missed the opposite trade on the break of 30. At least I gave the thoughts out yesterday. I did post a chart of where oil was bottoming out with nat gas. Seems to be holding so far. See above for DSI and further analysis. Oil is 64.98 and Nat gas is down to 2.925 since then.

Precious Metals and Mining Stocks

We have to have the patience of Job sitting on the precious metals trade. The longer we stay in this trading range though, the bigger the bounce will be when big money starts to load up.

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