ETF Trading Research 6/07/2018

Posted June 7, 2018

Made a decent comeback today in many trades. BRZU killed me, but I know we’ll get it back and more. I spoke with my associate today on the simple -5% rule and the importance of following rules. In fact, we have calculated the returns for the year and they are very good. But I am having them recalculate the returns but with keeping a stop at -5% for any loss more than -5%. I want to drive home the difference in profitability if you follow this one simple rule. It’s the most important rule and yet I break it for stupid reasons. It really needs to be automatic and we move to the next trade. Ok, just finished the calculations. My year to date return not counting this month is 24.37% with a projection of 66.32% if I kept the same pace moving forward to year end. The data improves to 29.67% and 79.05% if I had kept a -5% stop on the 21 trades I had that were -5% or worse, again, not counting this week. If I include this week, the numbers would actually be better.

Moral of the story? No matter what I say or do, keep the darn stop at -5%. Always. Automation will take care of this as it will automatically kick us out of a trade at -5% if we ever got to that level. But more importantly, it will let our winners ride to higher profits because it will keep us in the trend longer. The -5% will more than likely be lowered somewhat to possibly -2% for Conservative trades section.

The goal with this is to let the winners ride more and keep us from chasing losers lower. Simple as that. It follows my darn rules, not the human side of me that wants to break them from time to time.

Economic Data For Tomorrow

Nothing going tomorrow.

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

Stock Market

We did a flip flop again today and went short the market and at the same time got our loss back from yesterday in TVIX and turned it into a profit and got back half the GUSH loss and some of the UWT loss. More work to do. We exited at almost the perfect time too as futures bounced off of 2760 and shot up to 2774. From a micro perspective, we are in nomans land and we’ll approach tomorrow with caution, looking for a further dip hopefully to get long SOXL, LABU and TQQQ. Otherwise we may get some out of their opposites and TVIX again.

Foreign Markets

BRZU 3 days in the cold corner and normally would be a buy tomorrow. I think the move was overblown and we have already recovered 11% in it since it bottomed. RUSL and YINN should be good to go here too. I would put more weight on profiting here than probably U.S. market for the moment.

Interest Rates

TMF’s turn to do well today as these keep flip flopping.

Energy

While we profited in UWT and GUSH today, we could have got more. I still see oil to 70 and we have to lean long. I think we could use the rule to buy at the open if they are positive, but keep a stop if they go negative and come out ok until we hit 70. Data next week of course will play into this and OPEC on the 22nd.

Nat gas put a little scare into us pre-market for no real good reason. We did recover but still have our work cut out for us.

Precious Metals and Mining Stocks

The last 2 days with the dollar lower I really thought we were ready to take off. Silver did in fact take off higher, but it just couldn’t drag gold and JNUG with it. Very surprised by this. No, I’m not ready to put a JDST trade on for JNUG yet, but if we fall below 13.80 will consider it. I am 100% a bull, going into the summer as I said. I don’t know what market makers or whomever it is has up their sleeves, but they are keeping gold at bay.

I will make a prediction though. And I won’t be too far off. By the year 2020, we will be up probably 300% in JNUG. (see chart below for the big picture) But no, I don’t recommend a buy and hold of it. We should move up to the summer and then a crash and then off to the races for a bit. Patience. Especially right now as they keep it under some pressure. We hit a double top in JNUG at 14.30 today on the 5 minute chart and 14.40 needs to be broken for any real run. Day traders, if you were bright enough to sell for profit after a buy at 14 or just below, can keep a stop at 13.80. Swing traders can too to keep us at the -5% level, but I prefer to hedge it and possibly buy the dip in NUGT and/or UGLD if we got down to 1280 for any reason. One thing though that should keep us from having to worry about the downside is the USD/JPY is starting to crack. This can hurt the markets too, but it will help metals and miners with a higher Yen to join the higher Euro. This should push the dollar down to the 92 level minimum. USD/JPY breaks 109.47 should confirm it.

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