ETF Trading Research 7/5/2018

By Doug Eberhardt

Posted July 5, 2018

In ETF Analysis

Trading Rules

July Results (closed trades)

7/2 16.80%

7/3 3.04%

7/5 4.45%

Running Total: 24.29%

Thursday we knew would be volatile, and if you look at the chart of /ES, you can see we shot up, down, up, down and up. While we did well with TVIX, we let 1/2 shares slip to break even instead of locking in the profit. I’ll do that if I think we might break out higher. And yes, I love to take profit. But also notice, I do have a habit of saying; “If you are happy with profit, down on some other trades, lock in the profit.” I know this helps some of you, and sure, I would like to just lock in profit and look good for the Trading Service, but I truly believe that we can get runs higher in TVIX sometimes and I want to be a part of it.

We took a chance on DWT and DRIP and it paid off. I have been avoiding oil trades for the most part but felt the risk vs reward was with us. DRIP closed lower and DWT about where we sold. No use guessing, but we have to look long these two, especially with the news of the day and Trump pushing on Saudis to produce.

Nat gas was the disappointment today. I am fighting with myself the green weekly in DGAZ versus the weather we have had. Nat gas did break 2.86 though and I should have flipped to DGAZ then. I saw myself getting a little bit stubborn and decided twice to just get out flat the last 2 trades, so not a huge issue. I just have a feeling we may get a bigger draw tomorrow in nat gas with the heat the nation has been having.

Metals and miners continuing to move up and we’ll stick with the trade. JDST 2 days on the cold corner, so a bounce will come we know. For new subscribers, rarely if ever to we have a Cold or Hot Corner trend more than 3 days. That’s why it’s hard to be a swing trader when trading leveraged ETFs. Even though many want swing trades called, I think it is better for me to call the micro more and make suggestions of what I see big picture. Things can change at any point in time and we find ourselves stuck in a trade going the wrong way and that’s obviously not what we want. It was nice to see NUGT go positive today and between JNUG and NUGT we are break even right now. Day traders can still buy the dip and gold and silver as represented by UGLD and USLV are lagging and due for a bigger move sooner than later. Been a good run for JNUG though. We might pop up tomorrow but then take a breather before the bigger move up to over 20. Yes, over 20.

Economic Data For Tomorrow

Nonfarm Payrolls the big one tomorrow. See if data matters to the market once it comes out.

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

Stock Market

With Fed day in the books, we can now make a decision to go long or short with stops and see which trend we can catch. I am neutral with a slight favor to shorting the market as I don’t trust anything with trade wars or the Fed at this point, except that somehow the market is always supported and I don’t want to discount that. Price action is what matters.

We broke 50 again on TVIX just after the market closed and moved up to current price of 51.20. Some are anticipating the Chinese Tariffs to hit the U.S. hard and they might. But by the time the market opens, it can all be over. I would rather not take that risk and not be able to scalp it, so decided to just go home flat. I truthfully don’t care which way the market goes tomorrow, but to be on the right side of it. I am not letting go of my longer term into the summer move in /ES to 2800/3000. I want more than anything to get long. I just want to try and break 2700 first on some sort of a market freak out. Maybe we get it here in July and can get long into the end of summer into September and then load up on TVIX for that 100% trade in it I think we can get. You read that right; 100%.

Foreign Markets

YINN should be on your radar still. Low of 23.22 and high of 24.05. Once this tariff noise is over, it should take off with the falling dollar. RUSL had a good day even with oil data and we’ll keep an eye on BRZU too. 17.50 seems to be a base for it right now.

Interest Rates

TMF up again today and now green on the monthly. Still lean this way, but not as much as before. For a bit longer.

Energy

I said yesterday about the storage data for oil today; “If negative for oil, we should buy DWT and DRIP. Be ready.” Instead, we bought before the data and rode it up and sold. These should both be buys possibly in the AM. UWT turned red on the weekly and GUSH had already done so. The propensity is for them to move higher.

Nat gas we should wait for the data but I speculate the data to be bullish for it and thus UGAZ. We may speculate on UGAZ in the morning if under 59. Under 58 even better. But quick stop if negative and possibly flip sides. Last thing I want is for market makers to take advantage of us, but under 2.86 we should lean to 2.60 for nat gas and be in DGAZ (green weekly) and over 2.86 lean to UGAZ. Will be interesting to see the data.

Precious Metals and Mining Stocks

Dollar fell was down again but metals are lagging JNUG and NUGT. Happy overall with what I am seeing and you can see how single digit sentiment means a lot. But we said above to be careful with JNUG in that JDST is 2 days in the Cold Corner. For day traders, or those who want to insure their JNUG trade, if JDST is positive or goes positive for the day tomorrow or the next day, it can be good for a scalp possibly. We should keep an eye on 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