The continued weakness in the markets is allowing for entries into several Inverse ETFs. Inverse ETFs provide a good way to short the market with potentially less risk and in accounts that are not marginable. There are several broad market inverse ETFs that gave an end-of-day buy signal on July 3rd. The first is DXD, the Proshares Ultrashort Dow 30.
We will apply Alexander Elder’s Triple Screen method. Using this method, we look at the long-term chart first to establish the trend and then the short-term chart to find our buy and sell signals. Since we are looking to capture trends of several days to several weeks, our short-term charts are the daily charts and our long-term charts are the weekly chart.
DXD Long Term Trend
The Long-Term trend uses the weekly chart with a trend indicator – the MACD. The MACD gave a long-term buy trend signal during the second week of June (June 8-12). However, it took several weeks before the short-term chart gave us a buy signal.
DXD Short-Term Trend
You can see that on the short-term chart, the Force Index (an oscillator created by Alexander Elder) has provided a couple of signals since the long-term trend turned bullish. The first signal was given on the 15th followed by a sell signal on the 26th. This would have yielded about $2.00 per share gain or about 8% in ten days.
Friday gave us a second entry signal since the trend was established. To get into the position, we need to apply the third screen in the triple screen method. This takes the previous day’s price to determine buy-stop and stop-loss orders.
Buy-Stop: 49.85
Stop-Loss: 48.63
Risk per share: 1.22
Related posts:
- ETF Opportunity: QID ProShares Ultrashort QQQ As discussed previously, inverse ETFs allow traders to short the...
- Passed Trading Opportunity: SDS The Proshare’s Ultrashort S&P 500, SDS, displayed an excellent setup...
- Missed Opportunities Well, I’ve been reviewing my watchlist today (and some inverse...
- Today’s Trade: ALKS (Alkermes) Following one of my adhoc screens, I identified a stock...
I am an amateur trader and investor with over 15 years experience in the stock market. I was bred to be a fundamentalist and followed fundamental analysis until 2009. Following the 2007-2008 bear market, I began to shift from a buy-and-hold strategy to trend-following techniques.