SOXL in Range

I've been playing SOXL (long and short) for the past month or so. It's been stuck in a range since late January and doesn't show any sign of leaving it. I'm currently long, but it's coming up on resistance at the top of it's range. I'll probably get short today or tomorrow. Right now, it's easy 15% moves in each direction.

SOXL Up Big

Our SOXL trade from Tuesday, 2/26/2013, was a huge success. We went against the majority at the time of the trade because it was at support and it paid off in a big way.

I did jump out of the trade late yesterday and got into SQQQ. It looked like SOXL was at resistance and the market was starting to reverse. As of right now, SQQQ is down a little over 1% and SOXL is up 1.5% so it's not looking good at the moment. I'll watch it closely and close the trade if it gets much worse.

Swimming Up River

Here we are just about halfway through the trading day. The markets opened strong before fading most of the morning. I was holding MIDZ since around lunch yesterday. It turned out to be a fabulous trade -- one of my better trades this year. I was down a little this morning but MIDZ broke to the green around mid-morning. I had a choice at this time, keep riding the trade and hope the market keeps fading or get out and get long.

I decided to get out and get long.

I sold MIDZ and got in SOXL. Shortly after MIDZ fell and SOXL went up. Then the tide turned once more and SOXL lost most of it's gains for the day. That puts us where we are right now, about 12:15pm ET.

Looking at the market trend today and over the past few days most people have decided we have hit a top and are going straight down. I'm not so sure -- at least in the short term. Many of the 3x ETF's I follow have hit support. If they can hold we should start to rebound and possibly see some 8% - 10% gains. The downside is we could fall through support and head down, quickly.

My SOXL trade is down slightly as I type this, but I feel the odds are in my favor with this trade. There's a much better chance we hold support rather than fall through it.

Win or lose, I'll post an update with the results in a day or two.

Stocks Above 50MA 7% Less Than One Day Ago

On 2/20/2013 we had a fairly decent down day. The number of stocks above their 50MA dropped over 7% from the previous day. I ran the following study to determine what happens if we buy at the close of the down day or in this case, 2/20/2013.
As you can see, 5 days is the honey spot. It's tough to buy on such bad days, but this shows that most of the these big down days are just shakeouts. It pays to go against the market when we experience these down days.

Buying at the close on the 20th and selling at the close on the 27th would be the latest trade for this study. I'll put out an update on the 27th to see how it did this time around.

First Study

I really like reading studies that some blogs do. I figured if that's what I like there should be a few others that also enjoy it. With that said, here's my first crack at it.

Filtering out the low price/low volume stocks out over 80% of stocks advanced on Friday. On Thursday, only 21% advanced and on Wednesday only 11% advanced.

Our first study will look at trades for stocks that advanced less than 15% 2 days ago, less than 25% one day ago and greater than 80% today. If the conditions are met we buy at the close and sell X days later. Looking at results from 1980 - today, here's what we have when trading the S&P 500.


As we can see holding for 4 days is our best trade racking up over $40,000 on 17 trades in a 100k account. This means buying at the close on Friday and selling on the 28th should be a good trade.

Ragdoll

We continue to get thrown around like a ragdoll. As mentioned before, these small up and down days are something the MTT is not good at. The MTT tries to catch the big moves in either direction. With that said, we'll continue to take the trades and sooner or later we'll catch that golden ticket.

We are long TQQQ from EOD on 2/12/2013. Let's see what today brings us. Since 12/31/2012 we are up 7.22% with most of that coming on the first of the year.

In my new trading system that I'm fine tuning, I'm currently in SOXL from 2/5. It's paid us 4.17% up to this point.

MTT Trades

As promised, here are the MTT trades for the year. The first trade was on 12/31/2012. We just got out of our 2/6/2013 trade yesterday.

We are up 7.33% on the year, but it's really quite disappointing. The market has whipsawed us out of almost every trade. Conditions like this are when the MTT is most fragile. The MTT looks for short-term trends, so constant up and down days really hurt it.

What we have to remember is to stay with the system. Play every trade and very soon we'll catch the big one (10% - 15%). The trade you miss will be the one you regret.

Up, Down... Up, Down

The market doesn't know which way it wants to go. It looks like the big boys are going against the market making it very hard for us little guys to trade. We'll continue on waiting for the big score to appear... and it will.

I'm going to start posting my trades so everyone can verify the results. We'll post our MTT trades that we talk about most days, as well as a new system that I've been working on. The new system (name coming) is a little more complex but the returns have been fantastic. I won't reveal too much about it yet, but I think everyone will be interested after I show the results.

GASX and NUGT

Our GASX and NUGT trades from here and here are working out nicely. I think GASX is coming up on resistance so have stops in place. NUGT has a lot of room left to run.

Down?

The market collapsed yesterday but the future are up this morning. Our MTT and long term indicators both went red yesterday so we're short. Let's not get too excited about this open. The VIX is up big these past few days so swings are to be expected. We'll ride this out and reevaluate at the end of the day.

Rolling Over

The MTT is setup for EOD trades, but the market is rolling over today. The sell signal has just come in so I'm jumping in SQQQ a little early. There's a chance we'll have a rally into the close. If that happens we'll sell our position.

No More

The market continues to grind higher. I still feel we're near the top but what can you do. I've read over some of the old posts and I realize I'm trying to predict something that can't be predicted. Many "experts" believe they can call a market top or bottom, but in reality very few, if any, can. So, why should I try?

I created the MTT for exactly this... just like everyone else, I'm terrible at predicting things. The MTT tells us the short term trends while the long term indicator gives us, surprise, the long term indicator. These two indicators are all we need.

From this point on I'll stop trying to predict the tops and bottoms. I'm sure I'll give my thoughts, but no more "this is the day" type of posts.

With that said, we had a nice day on Friday. The MTT went green on Thursday so we were able to catch that move. Let's watch Monday and see what happens.

Correction Beginning

Our long term trend is still green but I have a feeling that it will flip today or tomorrow. Yesterday might have been the start of the correction everyone has been looking for.

The MTT told us to go long on the 29th. It was one of those trades that you probably knew was going against you, but it's important to take every trade the system says. We were stopped out yesterday and we now sit on the sidelines. It's not a bad place to be with the current uncertainness.

Two trades mentioned yesterday are still in play. GASL looks like it could head down and I'm still bullish on NUGT. Right after my post yesterday, NUGT shot up to the $8.40 range before falling after the fed spoke. I feel like it can still go up to $9.00 and then maybe close to $10.00. We'll watch is closely. If it falls below $7.75 it's time to get out.

GASL

GASL had a little fakeout this morning. It's coming back down and just broke $23. I think it continues further down towards the $20 range. Pick up $GASX if you want the inverse.

NUGT

We usually stick to the MTT and let it decide our trades. In this case I think it may be prudent to look outside of it.

NUGT has the potential to make a 20% - 30% move in the short term. It has major support around $7.75 - $8.00 and no resistance until $9.50 and then $10.50. I have entered in with a stop at $7.75.

Back to Green

A little surprisingly we had a fairly good day yesterday. Good enough to push the MTT positive and get us back to our long TQQQ position. Truthfully, I'm not too convinced this will last (hence, the foggy outlook) but I'll trust the MTT and get back in.

During these times it's best to stick to your plan. Like many others I think the market is near a top. Just because I think it's going down doesn't mean it will. It can ride higher for a while longer before coming back down. With that in mind, we'll follow our signals and do the best we can.

Still Waiting

The market continued to show weakness but it's not giving up easily. The MTT showed it's biggest decline in over three weeks but the long term indicator is still positive. We'll sit on the sidelines until that turns. There's too much risk of getting whipsawed if we enter now.

There's a chance the market will consolidate for a few more days and then rip higher. That's another reason for sitting out right now. The other option is for it to continue lower slowly before dropping like a rock. This is what I predict but I won't trade my prediction only what I see.

Waiting

We're sitting on the sidelines waiting for our next signal. The market keeps crawling higher where it will stop, nobody knows. We will monitor the long term trend and our MTT and look for our next opening. Right now the signs are mixed so we'll stay on the sidelines.

If the market jumps up we'll get back in. If we get a reversal then we'll take a short position. The key is to stay patient. It's easy to think we're missing some of these gains, but you can't win them all. We're looking for high probability trades and right now is not one of them.

Stay patient, my friend.

Down She Goes

As suspected the MTT turned red so we sold our TQQQ position. It was a brutal day for TQQQ, bringing our yearly profits way down. That's the way it goes and next time we might catch the upside.

I feel the market has turned. It tried to recover from the Apple earnings yesterday but it never really did. Today even though the market is up as I type this, I'm seeing more and more stocks breaking down while fewer stocks are breaking out. This is a sure sign of the market turning. Early next week we should have our sell signal and we'll start to take our shorts or inverse ETF's.

View for 1/23/2012

The market finally showed a bit of weakness on Wednesday. To top it off, Apple fell hard after-hours after reporting. This could finally be the start of our long-time coming correction.

Apple makes up a good percent of our TQQQ long trade so it's definitely going to affect us. There's almost no doubt in my mind the MTT will go negative and we'll exit our trade.

The next thing we'll watch is how much of a correction we receive. We'll monitor the long-term indicator to see if it flips to a sell. It it does we'll exit our 401k positions with some nice gains for the year.

We're only a little ahead of the S&P 500 for the year but our real advantage will be when the market turns and we stay out or go short. We should add a little to our gains while the S&P will lose most of the gains it made. This is exactly why the buy & hold mentality is completely wrong. When all signs are pointing down there's no reason to stay invested.

I'm getting ahead of myself... let's concentrate on tomorrow. Let's see if the market can recover from Apple and have a decent day.

The Situation

The market is undecided at the moment. Yesterday was a great day percentage wise, but not so great behind the scenes. As you can see the MTT barely budged. This usually means it's setting everyone up for a reversal. Traders see the nice move up and think things are all rosy. They get their money in only to see a reversal or whipsaw action take place. That's what this smells like to me.

In the end, we'll follow the MTT. It says long, which was obvious early yesterday, so we went long. I will not be surprised if we get shaken out today.

Don't get frustrated by this. The big moves are right around the corner and the moment you get upset is the time it will make it's move and leave you behind.

Morning Coffee

The market is actually doing a great job of holding steady these past few days. Every time it looks like the bears are gaining control things flip and the bulls take it back. Going short during this time can be tricky.

Luckily for us we have our MTT to follow. Here are the rules you should follow.

1. Trade in the direction of the long term signal. If it's pointing long, then you only take long trades.
2. Time your trades using the MTT. Use it for your entry and exits.
3. Longs we usually go with TQQQ and shorts we usually take TMF.

Following the rules above will allow you to profit no matter what the market is doing.

RUSS

Watch RUSS right here. If it can break above $15 it could run to $17.

Down

The market has definitely turned a corner this morning. Unless something changes this afternoon, we are definitely headed down from here. As mentioned earlier today we'll probably have at least 3 negative days.

I would abandon any longs and think about going short. FAZ, TZA and RUSS look like good shorts.

Bored

The market has decided to take a break these past few days. Not much action in either direction has led to a uneventful year.

The MTT has stayed green but only by a hair. I was hoping for a quick burst higher to start the week but we didn't get it. It now feels like we are about to hit a turning point and head lower.

Anything but a positive day will turn the MTT negative. I'll be looking to exit my position during the day. We're probably looking at a 3 - 5 day downturn to start. That will lead us into the weekend.

Bird's Eye View

The Bird's Eye View is something I use to give me a high level look at the market. It looks at various sectors and tells me how stocks are performing.

How To Time The Stock Market And Make 20%

You'll hear expert upon expert say you can't time the stock market. They'll tell you to put your money into the market and forget about it. That's the exact opposite of what you want to do. Why stay invested when the market is going down? That doesn't make sense.

What people don't realize is it is possible to time the stock market. You may not get in at the exact bottom or get out at the exact top -- you can get in and out near those two points. Doing that will give you somewhere around 20% yearly returns... all with only a few trades every year.

The market goes through cycles. Constantly going up and coming down, going up, coming down. All you should care about is getting invested when the market is swinging higher and getting out when it starts going down.

Sounds easy, doesn't it? It is! Trust me, it really is.

One Simple Chart

Here's the secret... there's one simple chart that tells you exactly when to buy and when to sell.

Pull up the $BPNYA on stockcharts.com, add a 30 SMA to it and you're in business. Every time the it crosses up through the 30 SMA you buy and when it crosses below you sell.

I told you it was easy. In the chart above you'll see the $BPNYA for the last few years along with $SPX below it. You'll notice you're catching every major move shortly after it occurs and getting out very near the top. If this is all you follow you'll average 20% or more every year while avoiding the big down moves.

Back In

It was obvious the MTT was going to go green yesterday afternoon so I jumped back in going long TQQQ.

The talk around town is the market is overextended and this is a bad time to go long. I know of a few people that cashed out yesterday expecting the worse.

To me this is not the right play at the moment. I don't know if the market has topped out, but I do know we've seen a nice bull run over the past month or so. If prices are going up, then there's no reason to exit at this time.

Wait for the market to give you a sign -- such as a big down day or consecutive big down days. You'll lose a little at the end but you'll make up for it the times where the market continues higher for weeks to come.

Last year was a great example of this. January 2012 was a great month and then everyone got scared in February and March at every little down day. Many traders exited their positions and missed the majority of the profits. Some even lost money when they went short and tried predict the top. Sound familiar?

Our long term indicator has remained long and we'll follow that. As long as that's green we'll continue to go long when the MTT tells us to. When the long term indicator goes red then we can concentrate on our shorts.

Direction

As pointed out yesterday, even though the market was up it showed a little weakness in the afternoon. Overall, I'm really liking the action this week.

The market was up big last week and needed to consolidate or pullback. So far it has decided to consolidate which means anyone long is preserving their gains. This is really important for 401k's that are unable to make trades very often.

If this continues for a few more days we should be in great shape to head even higher. As always things can turn on a dime so pay attention and be ready to act. I'll monitor the internal numbers throughout the day and post if I see anything change.

Weakening....

Starting to see the first signs of weakness in the market. We're up nicely on the day, but some of the internal numbers are suggesting otherwise. It's nothing to get excited about just yet, but I'll be keeping my eye on it.

Holding Up

The consolation/pullback has occurred just as we suspected. The good news is the market is holding up really well. Internal numbers show we are still very much in a bull phase at the moment. Another day or two of selling won't change that.

The plan for the moment is to sit back and wait for the MTT to trigger a long call. We'll jump in TECL or TQQQ at that time. Until then let's sit back and be patient.

Minor Correction -- Still Bullish

As suspected we had a minor correction yesterday. There's a good chance this continues for a few more days.

The MTT has gone red so we got out of our long position yesterday. Since the long term trend is still green we'll sit on the sidelines.

Here's our plan going forward. 1. We will wait until the MTT flashes green again. At that point we'll go long once more. 2. If the long term direction goes red then we'll take a short position.

Sitting on the sidelines is something new for us. In the past once the MTT flashed red we went short. I'll monitor the results and see if this was the right move.

Overbought

The market is extremely overbought. All the indicators I follow suggest some consolidation or more likely a pullback. During bull runs the market can stay overbought longer than most people think, but not when it's at an extreme level as it is now. Buyers will get scared and start to sell and take some profit at some point. My feeling is that will happen today or tomorrow.

I expect by Friday we'll be slightly down, .5% - 1%, or possibly break even. This would actually be a good thing as it will allow the market to reset. It will give everyone a chance to catch their breath. We'll then watch to see if more buyers step in to keep this bull running.

On another subject, I continue to test and fine tune the MTT strategy. The goal is to make it as simple as possible. When I'm done, I should be able to explain it to my 6 year old daughter and have her understand it.

It's going to be a fun year! I feel confident that this will be a big year no matter which direction the market turns. We'll follow the MTT and play what it tells us.

I have some big ideas for this site in the upcoming months. Look forward to some big news soon.

Momentum

The market carried the momentum over from the last day of 2012 to post a fabulous first day of 2013. It was the biggest breadth day since December of 2011 -- the start of the rally last year. There's a lot of hope going on right now that this will be the start of a new rally.

If this is the start of a rally it probably won't continue until next week. The move was so big yesterday that the market will have to consolidate or pullback slightly. This will allow it to regroup and push to new highs.

With that in mind this was one of the very few times that we will go against the long term and short term trends. I went short yesterday with the goal of logging a small gain as everyone else takes profits on their longs. I went short 10 minutes before the close and it cost me as the market rallied to new highs those last five minutes. That was a little disappointing. I may exit my position sometime today or possible hold until tomorrow. I'll see how the market reacts today. I'll then get back on the long side.

Whippy

The end of the year saw the markets see-saw back and fourth which caused some whipsaw action. On December 31st we had a very nice green day which flipped both the long and short signals. After losing some on the short position I went long near the end of the day. That proved to be a wise move as the fiscal cliff was resolved and the markets cheered it heavily.

Most of the ETF's we follow are overextended at this point so I'm expecting some consolidation or a pullback to occur over the next two days or so. You may want to take some profits off the table at the close today.

With some of our short term numbers reaching extreme this is one of the few times we can go against our indicators. If you're conservative stay clear of the market for a couple of days. If you're aggressive you can take a short in SOXL, TNA, TQQQ, NUGT or RUSL. Take profits in these shorts right away and set stops. The markets will be heading higher, so you don't want to get caught holding these shorts for very long.