I have shown repeatedly that buying the triple leveraged ETF, TQQQ, in a QQQ short term up-trend beats almost all individual stocks. The same can be true for buying the inverse ETF, SQQQ, on Day 1 of a QQQ short term down-trend. The problem is that this is very difficult to do. Day 1, by definition, is a change in trend and most people do not believe it. For me the best strategy is to take a small position on Day 1 and add to it only if the trend continues. One must be nimble, however, because the trend could end at anytime. A final comparison I made was to compare SQQQ to all stocks in my watchlist of growth stocks. I find that during this period since February 25, 11 of 559 stocks, or about 2%, advanced more than SQQQ. Good luck to finding such rare stocks in advance on Day 1! If one misses buying SQQQ on Day 1, there is a greater risk that SQQQ may trade down.
The GMI is 0 and I remain largely on the sidelines. If we get a good bounce I will transfer more retirement funds out of mutual funds and into money market funds. However, my university contributions to my retirement account will continue to accumulate S&P500 mimicking mutual funds, which is dollar cost averaging. The S&P500 as a group, but not all individual stocks, will eventually recover. I still think we are at the beginning of a significant market decline. Watch to see if the 10 week average (blue dotted) declines below the 30 week average (red line). We are not there yet but QQQ has closed below the 30 week average, a very ominous sign. We are also in a daily BWR down-trend, see chart 2. But beware of the brief bear market rallies that can seduce one to go long. There is plenty of time to wade back in once the GMI turns Green.
