23rd day of QQQ short term up-trend; leveraged 3X ETF’s shine again

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Since the GMI flashed a by signal on December 23rd, the QQQ has advanced +7.8%, the QLD +16% and the TYH +24.7%.   In the same period, 30% of the Nasdaq 100 stocks have advanced 10% or more and only 5% have advanced more than 23%.   Yet again, we find that riding a triple leveraged ETF in an up-trend beats almost all other stocks.   Why do we search for the rare stock that will outperform the 3X leveraged ETF , like TYH! Another leveraged ETF that did as well as TYH during this period is TQQQ. In fact the leveraged ETF, SOXL, advanced +34.4%!

3 thoughts on “23rd day of QQQ short term up-trend; leveraged 3X ETF’s shine again”

  1. I’m not sure GMI is providing good signals. Looking back on 2011 and using the buy sell signal based on >4 buy <4 sell for at least 5 days I calculate this strategy would have lost 21.3% last year. The buy/sell dates I'm using are 12/31, 2/24, 3/4, 3/17, 4/1, 5/31, 7/11, 8/5, 10/18, 10/25, 12/7, 12/20, 12/30 (buy). This is much worse than +2.5% QQQ returned for the year.

  2. From 2006 to late 2011, a strategy using two consecutive days at 4 or more as a buy signal and 2 or less as a sell signal outperformed the buy and hold of QQQ by 50% while reducing time in the market by about 40%. The GMI got me out of the market during the 2008 decline. This is a trend following system and in 2011 there was no long up or down trend to ride or avoid. When I publish the results you will be able to evaluate a strategy using the GMI as a market timing tool.

  3. Leveraged ETFs also carry much more complex and different tax implications than stocks. You can have much lower taxes on long term held stocks, while leveraged ETFs are always taxed as short positions I believe. It really isn’t which tool is right, but how you use it for the right purpose.

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