Market Signal Pro – Leveraged ETF’s – Market Volatility

Wow, it’s been way too long since I updated the blog. Now that I’m settled in the new office I really intend to post a lot more and keep up.

One of the projects we have been working on is a nifty little software tool called Market Signal Pro. Just enter a ticker symbol and it analyzes your stock based on one of our simple swing trade logic patterns. Here’s a screenshot of a signal it gave on GS recently.

We all know stocks cycle up and down over the short term, but did you know that when each of the 5 technical indicators light up green (see image), it is highly probable that the stock is at the bottom of this cycle, ripe for an imminent price reversal?

It has to do with selling exhaustion. A stock can only start going up when the selling pressure drops to an extremely low level. Each of the 5 criteria taken individually, detect that the short term sellers are starting to dry up. When all 5 occur simultaneously, this indicates that the stock is truly "oversold" before you buy it. Read more on the website and download a complimentary copy of the Market Signal Pro.

Next up is the new 3X ETF’s. Wow, I have been watching these things for a little over a week and even took a couple good trades. As long as you understand how the DAILY leveraged movement can affect the price over longer periods of time they can be great for trading. While 3X leverage might seem risky at first, one thing to keep in mind is that you can put on a trade using only 1/3 of the position size as you would trading an index.

——–3x Long———
BGU 3x Long Russell 1000
TNA 3x Long Russell 2000
ERX 3x Long Energy
FAS 3x Long Financials

——–3x Shorts——-
BGZ 3x Short Russell 1000
TZA 3x Short Russell 2000
ERY 3x short Energy
FAZ 3x Short Financials

We built a great new page for the Market Dashboard in the Research Lab that follows a bunch of the leveraged ETF’s each day. What really makes it great is that we use the opening price each day. So as the market opens, no matter which way it gaps, we get a true picture of the direction from the open. Today was a great example of why this is so cool. The DOW opened down like 150 then went straight up. Normal people that use traditional sources thought the market was having a bad day until it went positive but we knew right from the get-go it was a big up day. Take a look at how it turned out…

So we use a histogram each day to follow all these 2x and 3x leveraged ETF’s using the opening price as the starting point. TNA was actually up over 26% from the open as we note in our chart. Everyone else shows it was up 17% because they show you the quote based on the previous day close. Anyway looking at how a stock or ETF moves from the open is a lot more enlightening and I will do another post about that in the future. For now I have to get ready for Thanksgiving but there is going to be a lot of posting going on here from now on. I’m back in the groove and ready to go no matter which way this market goes. Heck I’ve been both long and short recently and made money both ways. The trick it seems is to get the direction from the open right and don’t hold very long. The leveraged ETF’s have really opened up a whole new world for traders and finally give us some real wild large percentage swings on a daily basis. Beats watching the grass grow.

Have a great Thanksgiving everyone and I promise to post several times a week from here on out. You will see…

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