This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Trading Leveraged ETFs: Dave's Midday


Generally speaking we use leveraged issues for trading purposes in Dave's Special Portfolio (DSP) at the ETF Digest . 

We're a proponent of using these issues tactically mindful that many of these issues compound daily. Investors should do their homework on this aspect before using them including reading the prospectus for each issue. Leveraged issues are only suitable for sophisticated and active investors.

To accomplish satisfactory or superior performance, we use weekly/daily charts for DSP as they accommodate the unique aspects of these issues. Many day traders opt for intraday or shorter-term time views. 

The important factor is to key all our activity directly to the index and/or unleveraged ETF rather than the leveraged issue. Therefore, if we have an actionable signal for the S&P 500 Index, our decision is based on the behavior of SPY and the index rather than UPRO (ProShares 3 X Leveraged Bull ETF) or SPXU (ProShares 3 X Leveraged Bear ETF).

Liquidity considerations drive the next level of selection. After all, good trading and execution characteristics are essential to success. Remember, newer issues, no matter how seductive they may seem, need to build a following and this is especially true for retail investors and financial advisors who lack the capacity to create new shares in 50-100K increments.

Occasionally, a new leveraged issue will come to market with little history but meet with strong initial demand due to a linkage to a popular index where there is little competition. Commodity and currency issues are common examples and are overlooked, but important sectors.

Today we'll feature gold as represented by GLD (SPYDR Gold Trust) paired with DGP (PowerShares DB Leveraged 2 X Gold ETN)

First, is the weekly chart of GLD to form the setup by identifying the overall trend which is positive but extended noting the DeMark sequential weekly "8" reading. However, despite the "8" reading, few other indicators show gold overbought or extended. This will bear close watching this week.

You'll note the three Keltner bands are rising as is the 5 period moving average. Therefore the trend is bullish but mature. Further, the large correction the previous week knocked a lot of shorts out including us. But, when you're trading you press on.




Next up is the daily chart of GLD with similar annotations and indicators followed by the daily chart of DGP.







With all systems in a buy phase, we were able to take our position in DGP and will hold it until we reach our stop which will first be based on readings of daily GLD analysis combined with an impending DeMark sequential "9" reading on weekly charts.

While this trading information is incomplete as to the entirety of indicators utilized, ETF Digest subscribers are able to view the complete trading methodology as they're implemented.

This is a demonstration and is not intended the reader buy or sell any security.

Readers are able to make requests for coverage of other sectors or ask questions about leveraged issues by emailing me at dave AT etfdigest DOT com.

Disclaimer: The ETF Digest maintains positions in GLD and DGP.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
DGP $24.03 0.00%
GLD $115.47 0.00%
AAPL $129.36 0.00%
FB $79.60 0.00%
GOOG $573.64 0.00%

Markets

DOW 18,203.37 -85.26 -0.47%
S&P 500 2,107.78 -9.61 -0.45%
NASDAQ 4,979.9010 -28.1950 -0.56%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs