Market’s Next Move

When guessing what will happen next, you need look no farther then the trend, and the condition of the market.  So what knowledge can be gleaned from the current situation?

This chart shows the SPY, an etf that tracks the S&P 500 index.  Read the rest of this entry »

Triple Leveraged Arbitrage

This is a long term play you’ve NEVER heard of.  Its not quite arbitrage, but it does have some similarities.  Its similar to an arbitrage strategy in that you have a long position, and a short position on the same underlying.  In other ways its like selling call options dated fairly far out, in that the odds are highly on your side, and it should slowly but relatively safely make money over longer time periods.  Yet the reality is this play is like nothing you’ve ever seen. I call this ETF strategy: Triple Leveraged Arbitrage.

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Time to short financials?

So lets get straight to the point.  The financial industry has been destroyed during this recession.  Going by the XLF, a ETF that focuses on the financial sector, at the prior bottom, the sector was down 83%. Meaning a recovery to previous levels would be a 488% gain.  Since the March bottom, it rallied 110%, and after a small pullback, has dropped to just 85% higher then the march levels.

So what happens next?  After this rollercoaster ride of a sector, what’s likely to happen next?  There are a couple key ways we can predict that, but keep in mind that the point of technical analysis isn’t to be 100% sure of the direction; the idea is to get a good idea of what is most likely to happen next, and capitalize on the opperunities the market gives you, while keeping your risk in check.  With that said, lets take a look at the technical picture.  Basic technical analysis, step 1 is to identify support and resistance levels.  Key support levels seem to be 11.20, and 9.80.
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Stock Trading Strategy: The Bullish Percent Chart

In my previous article on stock trading strategy, I showed you how to use relative performance to decide what sectors you should be buying and selling.  In this article, I’ll show you how to use a little-known tool to call reversals in the major economic sectors.  What is this little known tool?  Its called a Bullish Percent Index, or BP Chart. Read the rest of this entry »

Picking the right sector

The vast majority of your returns are determined not by what stocks you choose to invest in, but what industries you choose to invest in.  With this in mind, one of the key things you should be doing when investing is deciding what sectors you think will do the best.  How do you do this?

Determining what sector should do well is actually a fairly simple task.  It’s all based on the observation that markets trend.  Day to day fluctuations may be fairly random and unpredictable, but the effect of those day to day fluctuations on the stock price over a period of months is generally consistent, weather it be up or down.

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Pyramid those profits!

by: Jordan J. Weir

We’ve all heard the age old adage, cut your losses short, and let your profits ride. Yet the vast majority of traders don’t use this concept to its fullest. The proper application of this single, pivotal piece of advice, is usually the difference between showing a profit at the end of the month, and showing a loss. This method is known as “pyramiding your profits”.

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