Views On Gold

Gold has been a very popular investment vehicle, either through the use of the GLD ETF, or through some 2x leveraged ETFs such as DGP and DZZ.

However, I’ve been bearish on Gold for a while.  Here’s one reason why:

gold

Ths is a chart that I published for my clients over a month ago (and it’s not the first time I published it).

This is just one indicator that we have that gives you a read on my views on gold – much deeper than any chart you can see.  Most of my analysis is about finding data that supports underlying movement.  Most people think stock movement is a random walk.  I think the markets are adaptive.  And since even a random action can be predictive at some points in time, an adaptive market and even more so, behavioral market, is quite predictable.

To learn more about my quantiative approach, consider joining me by clicking here.

Regards,

Stock Barometer

Investment Research Group, Inc.

 

What Is A ETF

What is a ETF?

ETF stands for Exchange Traded Fund (ETF). As someone who has traded for the past two decades, I remember watching when the market went from relatively few ETFs to literally thousands of ETFs now.

The benefit of an ETF over a mutual fund is that an ETF trades like a stock – you can get in and out of your ETF positions during the day.  While you can place an order to buy or sell your Mutual Funds during the day,  your trade will not be executed until the close – at the calculated NAV – Net Asset Value – of the Mutual Fund.

Trade ETFs with a Pro – Click Here To Learn More

Worse case scenario with a Mutual funds is that the market may do something out of the ordinary and you will not be able to get out of your position until the end of the trading day. And if you don’t place your order by the end of the previous trading day, your order won’t be placed until the end of the next trading day. That’s 24-hours of risk time. Whereas with a ETF – you will be able to get out at the open, or only 17.5 hours of risk…

Another benefit of ETFs is that you can invest or trade commodities and other investment vehicles that you couldn’t trade in the past. This gets a little more complicated, because some commodity ETFs will not make a good investment for the buy and holders out there. They’re more for an investment or a hedge type position – like adding gold or oil to your portfolio.

Let’s look at some common definitions and discuss them:

What is a ETF? A mutual fund that is traded on a stock exchange.

I don’t like this definition of a ETF because it implies an ETF is a mutual fund, when it isn’t. Although there currently is a trend for more mutual finds to become ETFs. The initial benefits of ETF was that there was NO ACTIVE MANAGEMENT – the ETFs were indices – fixed stocks – and this allowed for very low fees. No management also reduces the likelihood of style shift. This is when you invest in a small cap mutual fund and because small caps are under performing, the manager decides to add a little large cap exposure…

Greed is a powerful motivator.

What is a ETF? An investment fund, units of which can be bought and sold on a stock exchange. Often used by tracker funds.

This is a much better definition, except for the “investment” part. Who says ETFs are solely for investment purposes. Actually, they’re very popular with traders.

What is a ETF? Collections of stocks that are bought and sold as a package on an exchange, principally the American Stock Exchange, but also the NYSE, CBOE, and Nasdaq.

This is an even better definition – except that comment about the AMEX (american stock exchange). The Nasdaq owns the NYSE.

Why trade ETFs?

  • Reduced risk of substantial loss - stocks can drop 50% because the CEO was caught with his hands in the cookie jar? ETFs are automatically diversified equities, which greatly reduces this risk because there is minimal exposure to any one individual stock. By trading ETFs, you can greatly reduce the risk of a trading catastrophe.
  • Access to more markets - With ETFs, you now have access to markets that were previously difficult and expensive for retail investors to participate in. Government T-bonds, international markets, commodities, and even a currency ETF can all be traded with the same ease and commission cost of an individual stock. With new ETFs being created every month, the realm of trading opportunities keeps growing.
  • Liquidity is never an issue - Unlike individual stocks, in which liquidity can greatly affect how a stock trades, all exchange traded funds are synthetic instruments. As such, the amount of average daily volume that an ETF trades is, for the most part, irrelevant. Even if a particular ETF had no buyers or sellers for several hours, the bid and ask prices would continue to move in correlation with the market value of the ETF that is derived from the prices of the underlying stocks.
  • Lower trading commissions - Prior to the inception of ETFs, if you wanted to buy a basket of stocks within a particular industry sector, you had to pay a separate commission for each stock you wanted to buy. However, through trading in the sector-specific ETFs, you now only pay one commission to buy or sell short an entire group of stocks within an industry. And some mutual fund companies are now allowing no commission ETF trades! They are competing for your money – which means better deals for you.
  • No uptick rule - Unlike individual stocks, ETFs are not subject to the uptick rule that prevents the short sale of stocks on a downtick. This makes selling short an ETF much easier and quicker than with an individual stock.
  • Ability to profit in bear markets - Thanks to inversely correlated “short” ETFs, traders and investors can now aim to profit in bear markets without selling short. If you’ve always wanted to to take advantage of bear markets, but were not confident with selling short, the “short” or “Inverse” ETFs enable you to take a bearish position with the same simplicity as buying any other ETF. Obviously, the inherit risks of short selling still apply.

Trade ETFs with a Pro – Click Here To Learn More

 

Hedge Trading

There are many different ways to hedge trading positions.  This article from our popular 1-2-3 plus trading advisory applies a very simple strategy that you can use in your investment accounts.

Japan

How could I talk about anything but.

Welcome to Lynn T’s 1-2-3 PLUS Alert.  To learn more about my Partial Leverage Utilization System, click here.

The last article I put out spoke of WWIII coming because of the unrest we had/have in the Middle East. Now, it would seem that some other force is telling us to stop bickering and be kinder to one another.  My thoughts and prayers go out to the people living in Japan through these trying times and to the families that have either lost a loved one or have yet to find them.

The markets didn’t react quite as badly as I thought they would after the initial shock of the earthquake. Now that more time has elapsed, I think the reality will be setting in and the markets will be responding more to the devastation during this next week…and the bears may come out of hibernation just in time to seize this opportunity.

No new position (see weighting below).

Current Weighting Suggestion:

1/3 in Bullish Leverage

2/3 Cash

Long Term Investor Buy Signal Alert

Over the past several years, this indicator has predicted several 100-point or more moves in the S&P.  There are only 2 to 3 of these signals every year, so they’re worth paying attention to.  This is an ideal signal for investors to put cash to work following a down move in the market.

There is no long term investor buy signal at present.

Past Long Term Investor Buy Signals

September 13, 2010 – currently active

July 26, 2010 – resulted in an advance of around 20 points over 1 week.

March 18, 2009 – resulted in an advance of around 235 points over 4 months.

October 29, 2008 – resulted in an advance of 76 points over 4 days.

July 23, 2008 – resulted in an advance of 34 points over 3 weeks.

Long Term Investor Crash Warning Indicator

This indicator is a variation of the widely published Hindenburg Omen.  We’ll let you know when we’re seeing indications of a potential crash to come.  This would be a good time for long term investors to take some money off the table.

This indicator is not coming into play at this point in time.

You can email me with any questions at plus@stockbarometer.com.

Have a great week!

Lynn

To learn more about my Partial Leverage Utilization System, click here.

____________________________________________________________

Various levels of Leverage and hedge trading can be achieved with the following funds or trading vehicles:

Direxion

S&P 500 Bull 2.5x Fund (DXSLX)

S&P 500 Bear 2.5x Find (DXSSX)

Rydex (Rydex Accounts have morning trade options for AM pricing)

S&P 500 2x Strategy (RYTNX) – Bull (Titan Fund)

Inverse S&P 500 2x Strategy (RYTPX) – Bear (Tempest Fund)

Profunds

Ultra Bull Fund 2x (ULPIX)

Ultra Bear (inverse) Fund 2x (URPIX)

ETFs (ETFs can be traded intra day like stocks)

ProShares Ultra 2x S&P500 (AMEX:SSO)

ProShares UltraShort 2x S&P500 (AMEX:SDS)

Note: while the system will work with the DOW and NDX related funds and ETFs, it is tuned to work best with the S&P.

____________________________________________________________

If you are interested in continuing to receive these hedge trading alerts, subscribe by clicking here.

 

Crude Oil Trade Update

Here’s an updated crude oil trade view of our OIL Volatility Chart – as you can see, I’m an OIL BULL!

crude oil trade

crude oil trade

So how can you, the average person participate in the move in oil?  Here are two ways how to trade in oil.  First, USO, it is an ETF that captures move similar to oil.

You can buy, sell and short this in a cash or margin account.  However, if you have an IRA or a 401k (with a self directed brokerage) you can not go short USO.  So you need to consider an inverse ETFs.

Want more risk?  I.e. if oil goes up 100% you can make 200%?  UCO is a 2x leveraged ETF – meaning it goes up at 2x the rate that oil does…

You just have to love ETFs here.  If you want to follow the crude oil trade with an oil etf on a daily basis, feel free to sign up to my daily service.  Here’s the link:

I want to follow Stock Barometer’s calls on oil, gold, bonds, the dollar and the stock market!

 

QQQQ Update

As discussed in my alert to subscribers today – here’s the hourly action on the QQQQ:

QQQQ Trade

QQQQ Trade

 

Where is the stock market top?

Good afternoon traders and investors!

Seems like everyone and myself was looking for a top in the market.  However, all the market could muster was a consolidation.  That means that the market is going higher.  My call is for the markets to go higher into February 16th.

Good News?

Subscribers to Bill West’s Fat Pitch ETF Advisory just had 5 more winners!    Bill is a commodity and futures trader and heads up our ETF advisory.  If you don’t trade ETFs, you should consider looking into them.  And you can learn a lot from Bill and his 30 years trading experience.

Bill has recently traded ETFs in the British Pound, oil, bonds, commodities, metals and inverse ETFs to take advantage of counter trend moves.

If you want to see Bill’s current portfolio and follow along with his next recommendations for only $1, click the following link:

Click here to See Bill’s ETF Picks

QQQQ Options

If you trade QQQQ Options, I’ve put my recommendations for upside CALLS on our blog.  Plus a review of one stock that I’m recommending.

Click here to visit our Stock Market Blog

This Week’s Stock Market Indicator from IRG

Ok, the chart in our last article generated some interest, so here’s another one I published in my Daily Stock Barometer this morning.

So why’s the market going higher?

Volatility Thrust

This is just one indicator that shows how energy is created in the market.  Periods of high volatility can cause markets to go higher (even if the volatility is low).  That’s one of the indicators we’re seeing here.

However, the amount of strength in the market is about 1-2 weeks worth.  This is not a significant bottom.  But it is a tradeable bottom.

Also Note – if you sign up for an Annual Subscription to Bill West’s Fat Pitch ETF Advisory, you will get access to all our charts and research!

Click here to sign up to Bill’s service for a year – you will also save 20% off the monthly price!

Subscribe To Bill West’s ETF Advisory For $169/Year

Or Try the service for a month and switch to an annual service if you really enjoy his service.  I trust you will.

Our Next Webinar:

Our next live webinar is scheduled for 2/15 from 12-1pm Eastern.  We’ll be using the chat room (link below).  I’ll be talking about the state of the stock market at that time.  Please put it on your calendar and I hope you can join us.

Stock Barometer Chat Room

Our Trading New Newsletter

I’ve taken a bunch of financial reports on the stock market and put them in an email – about 12 reports in all and you’ll get them in a 12-part email series (otherwise the email would be too big to send you at once).  There is some data on bear market recoveries, some ETF research that’s a must read debate on trading versus investing as well as a free eBook.   I’ve also posted part of my 2011 forecast on this page for a limited time.

Click here to take a look at our newsletter and 2011 forecast

Have You Seen Our Site Lately?

We have a few new newsletter deals for your consideration.  Feel free to stop by the site and give it a look.  They’re at the bottom of the grid.

http://www.stockbarometer.com/

That’s it for today.  I hope you have a great rest of your week!  I look forward to seeing you at our next live webinar!

Regards,

Stock Barometer

Shorting Bonds etf – Can You Make Money Trading Them?

The answer is a resounding YES – but be careful,  you can also lose money by holding them.

The reason I bring it up here is that bonds may catch a bid here.  And this could be an opportunity if you consider the use of leveraved bond etf or ultrashort bond etf.

Below is a chart of TLT etf – The 20 year tlt bond ETF.  It has dropped over 18% from its highs in August to its current lows.

TLT Bond Trade

Lehman's 20 Year Bond ETF

In that same time, you could have owned etf TBT from around 30 and held it to over $40/share.  ETF TBT is an inverse bond ETF, it goes up as bonds go down.  Bonds go down as interest rates rise.

Taking it to another level, there are triple leveraged bond ETFs, TMF and TMV etf that are very popular to trade.  For example, in that same period above, TMV etf went from around 31 to almost 50.  That would have given you a return in the 60% range!!!

And that’s with bonds – did you ever think there would be a shorting bonds etf?  I didn’t – and now look at it, you have a triple leveraged bond etf.

Need help timing the market and figuring out what bear bod ETFs to buy (or bond bear etf)?

We have a few ETF Trading Financial Newsletters that can help you and we offer $1 trials to get started.

Here is a link to our site:

Stock Market ETF Timing and Trading Newsletters

 

Here is a good currency spread

Is the Chinese Currency finally going to strengthen?


Hello Everybody,

 

To learn more about my Fat Pitch ETF Advisory, please click here.

 

Trade Actions:

 

Buy EUO ( Proshares Ultra-Short Euro Currency ) at the Market

 

Sell SH ( Short SP ) at 40.2 or Better

 

Market Outlook/Potential Opportunities:


Unbold is last week’s commentary. Bold is this week’s commentary.

Stock Market ?

This is going to be a tough market to buy into. Prices are being snuck up preventing new positions to be carefully bought. Also I am not sure that we should be buying into this market. We are already comfortably long.
No need to chase here. Plus there is a very good possibility of a stiff correction in the beginning of
2011. So we are pretty much going to stay where we are at. I am not sure that I want to take the risk. One thought process you should have when making a trade is to always ask yourself, “What is my risk”. Stay the course with the last two stock positions. Tighten up the stops again. Sure is nice when you can easily walk up stops.


I believe we are finally getting close to a top here. I am still looking for more signs and believe we should be trying to accumulate short funds here, but we need to do it at our price and not chase anything. SH ( Short SP ) is selling at
43.3 Let us put in a low ball offer to buy it at 40.2

Energy ?

Maintain bullishness on the Oil market, but there is one cautionary take if you are first entering this market. After doing a little research, this is what I have found. USO is 100 percent invested in “front month” oil futures and must therefore roll over 100 percent of its assets each and every month. With oil markets currently in contango (i.e. prices are higher as you go out in time), USO loses money every time it rolls the portfolio. Unfortunately, no other exchange-traded products can accurately track crude oil prices, either.

One alternative to consider is the United States 12-Month Oil Fund (USL). This fund keeps one-twelfth of its portfolio in each of the next twelve months of crude oil futures. USL is still affected by the negative roll yield, but only 8.3 percent
of the portfolio gets hit each month, not 100 percent as in USO.

Well we got stopped out of USO. I am not happy about it, but we broke even. We will look to re-enter the
Oil market after a correction. Next time we are going to play oil a different way. ( See the research above.)

Metals ???


Well we are now out of our position an PALL. We made a very nice profit. At this time I feel that the Metals are going to take a rest. Maybe even a 3 month correction phase.


Boy was I wrong on this one. We should of never left the Metals. On Thursday I scrambled to get on board a futures contract in Palladium but I am not sure what to recommend with the ETF. It sure does appear that the metals
might have entered an acceleration phase up. It kind of caught a number of people of guard, who even though they are bullish like me, were still thinking a pullback might be in order. It is just hard for me to recommend taking the risk.

 

Good thing we did not take the risk. The metals have entered a correction phase like I originally projected. This time it should trace out a Elliot Wave 5-count. At that time we will be looking to buy for the big move coming.

Bonds ?

We are now out of our Short Bond Fund ( TBT ). It took awhile for a profit, but we got it. There should be a possible counter trend rally happening soon. Isn’t it funny. Just when everybody gets bearish bonds, the bond market stages a rally. Still it is a minor wave rally and I will be looking for a better set-up to re-enter into a Short-Bond Fund. Just not now.

 

Currencies ?

 

The theme for 2011 will be the rising value of the Chinese Yuan. We bought the Market Vectors Chinese Renminbi ( Yuan ) Exchange Traded Note that should rise in value with the Yuan. I guess Asian Currencies is the place to be. The Japanese Yen passed a critical test this week and appears that it will continue its upward climb.

 

So we bought YCL at 32.7 ( Proshares Ultra Japanese Yen ETF )


The Euro Currency seems to be in trouble and is a good hedge against our long Yen position.

Therefore Buy EUO ( Proshares Ultra-Short Euro Currency ) at the Market.

Commodities ?

We Bought Powershares DYY ( Leveraged Commodity Note) at 9.7 on a Limit Order


We Bought LSC ( Commodity Index Tracking Exchange Traded Note ) at 8.5 on a Limit Order

The ELEMENTS S&P Commodity Trends Indicator Exchange-Traded Note (ETN) is designed to reproduce the performance of the S&P Commodity Trends Indicator – Total Return. The index is comprised of 16 commodity futures contracts divided among six commodity sectors. The Index is designed to capture trends within commodity markets by setting its sector groupings long or short each month based on price signals.


It appears we should of waited on these two funds. We might have to sit with a little bit of pressure here, but I believe we will eventually get rewarded.

 

I do want to point out that you should always read the prospectus on any Exchange traded Fund or Note that is recommended so you understand any risk that might be associated with it.

Current Long Portfolio

Bought Powershares DYY ( Leveraged Commodity Note)


at 9.7 on a Limit Order

It closed at 9.64

Bought LSC ( Commodity Index Tracking Exchange TradedNote )


at 8.5 on a Limit Order


It closed at 8.35

Bought YCL at 32 on a LimitOrder

(Proshares Ultra Japanese Yen ETF )


It closed at 32

Bought CNY (Chinese Yuan) Market Vectors Exchange Traded Note


Bought at the Market 40.37


It closed at 40.36

Bought PIV ( Value Line Timeliness Select ) at 12.9 It closed at 13.42


Put in a Sell Stop at 13.3

Bought QQQQ ( Nasq 100 ) at 42.5 It closed at 55.8


Put in a Sell Stop at 54.9

 

Current Short Portfolio:

None

 

Recently Closed Positions

 

Bought USO ( Oil ) at 37.4 Sold on a Sell Stop at 37.4

Bought NLR ( Nuclear ) at 19.9 Sold on a Sell Stop at 25

Bought TBT (Ultra-Short 20 year Treasuries ) at 38.20 Sold on a Limit Order at 39.5

Bought TBT (Ultra-Short 20 year Treasuries ) at 35.8 Sold on a Limit Order at 39.5

Bought PALL ( Palladium ) at 50 Sold on a Limit Order at 75

If you’re receiving this, you can access all our previous articles and recommendations by clicking here.

If you’re interested in continuing to receive our ETF Trades, please click here to go to our subscribe page.

 

Thank You

 

If you want to contact me send me an e-mail bill@stockbarometer.com

 

Regards,

 

Stock Barometer

ETF Trading Systems

ETF Trading is the wave of the future!  They are beneficial over mutual funds and stocks for a variety of reasons.

First and foremost, an ETF is unlikely to crash like a stock, so your risk can be lower, but they trade just like stocks so you can get in and out anytime, unlike Mutual Funds.

Second, you can gain exposure to commodities ETFs where you couldn’t in years past. Imagine trading oil and gold and silver.  You had to be a commodity futures trader to trade these only a few years ago.

And third, there are leveraged ETFs where you can maximize your gains with up to 3x leverage.  So if the market goes up 1%, you make 3%!  There are inverse ETFs, so you can get positive returns in a retirement account when the market moves lower.

But there are also traps with some ETFs.  Best not to trade alone.  We offer two ETF newsletters that can take you to that next level.  Each uses their own ETF Trading Strategies.  And you can sign up today for a discounted 4-week trial.

Trade ETFs

With The McMillan Portfolio

Mark McMillan’s daily service tells you when to buy and sell the DIA, QQQQ, SPY, IWM, USD, KRE, KBE and TLT.  This service also comes with a Live Stock Trading Chat Room where Mark will update his intra day expectations, show you his trading screen and answer your questions.  This is a remarkable value!

Trade ETFs with

Bill West’s Fat Pitch ETF Advisory

When trading the new commodity and currency ETFs, you want someone with experience.  Bill West is a former Commodity and S&P Futures Trader.  He brings over 30 years of stock market trading experience to you.  Click the above link to learn more about his weekly financial advisory.