The new 3x ETF’s–triple your pleasure — or pain

GMI2/6
GMI-R5/10
T210858%

As you know, when I try to trade the trend of the QQQQ, I buy QLD (ultra long) or QID (ultra short) ETF’s.   These ultra   ETF’s are designed to move twice as much as the underlying index they track.   Well, less well known is that there now exist 3x ETF’s, designed to move three times as much as the underlying index. I knew about the recent emergence of these Direxion ETF’s, but was surprised to see how quickly they have caught on.   I have now located 16 of them, and 8 of them traded more than one million   shares each on the NYSE on Friday.   Here are the ones I have found.   Bull ETF’s: FAS, BGU, TNA, ERX, EDC, MWJ, TYH, and DZK.   Bear ETF’s: FAZ, BGZ, TZA, ERY, EDZ, MWN, TYP, DPK .   One can even trade options on most of these!   Remember, the leverage works both ways, they aim to go up or down at 3x the speed of the relevant index.   Still, if I have a good idea of the trend, these ETF’s may prove better than going to the casino and putting everything on black or red………..

Meanwhile, the GMI

Read moreThe new 3x ETF’s–triple your pleasure — or pain

All indicators negative; 12th day of QQQQ short term down-trend

GMI0/6
GMI-R0/10
T210838%

All of my indicators have turned negative again and I am back to cash.   I have considered buying some QID, but with my short term moving averages being flat, I will probably get repeatedly whipsawed as the indexes move above and below their averages.   However, at some point a real tradable trend will develop. There were 3 new highs and 138 new lows in my universe of 4,000 stocks on Friday.   Only 30% of the Nasdaq 100 stocks closed above their 30 day averages and the QQQQ   just completed the 12th day of its short term down-trend.

One of the GMI’s components tracks the percentage of “successful” stocks that hit a new high 10 days ago that closed higher today than they closed 10 days ago.   It is a useful indicator to see if break-out stocks are continuing to advance.   This indicator has been negative since late October,   largely because we rarely saw the required 20 new highs in a day.   You can see this indicator is still negative in the GMI table below….

Read moreAll indicators negative; 12th day of QQQQ short term down-trend