ETFs, Leveraged ETFs, Sector Funds

[No-Quarter]

So you know, this is where I am heading with my new IRA.

When in the Surfer site, go to the ‘Strategy Hall of Fame’ section, and click on the ‘Ultra ETF’ tab. Select a Surfer Ultra ETF strategy. Use Surfer to select the current best ultra ETF in that strategy. Invest 100% in the ETF selected by the chosen Ultra ETF strategy.

Now I could simply rely on Surfer to signal me when to move to the next current best ETF in my selected strategy and bank the gains, and be happy going forward based on the historical performance (and my new found understand if the logic behind Surfer), but, for someone that wants to take more control, and willing to trade more frequently, I learned of a way to improve on this.

I like the Surfer Ultra ETF strategy called ‘The Right Direxion’. There are other Ultra ETF strategies in the Hall of Fame that have a higher Surfer score, but these use thinly traded ETF’s which might be hard to get into and out of when so desired. The current chosen ETF in this strategy is SOXL. It is a bull 3x ETF. I then create a chart that compares this with the Bear 3x S&P index ETF called SPXS.

https://stockcharts.com/h-sc/ui?s=SOXL:SPXS

Now alter this chart in the follow ways;

In the Chart Attributes section –
In the ‘Range’ box; change ‘Fill the Chart’ to ‘1 year’
In the ‘Type’ box; change ‘Candlestick’ to ‘Invisible’
In the line below the ‘Type’ box; in the ‘Volume’ box, change ‘Overlay’ to ‘Off’, and on the far right, check the box for ‘Zoom Thumbnail’.

In the Overlays section –
Change the first Simple Moving Average range ‘50’ to ‘6’
Change the second Simple Moving Average range ‘200’ to ‘10’

In the Indicators section –
Change ‘RSI’ to ‘None’
Change ‘MCAD’ to ‘None’

Now click on the chart ‘Update’ button.

The idea here is to switch between SOXL and SPXS based on the 6 day and 10 day cross overs on this chart.

Using this chart to tell me when to switch between these two ETF’s, I paper traded for 2018, starting with the first cross over in January 2018. Following this practice I would have realized a ~45% increase so far this year. Simply letting the Surfer strategy work, 2018 has been a flat year.

Oh, and one more important note, using a trading platform such as TD Ameritrade, I can place a trailing stop underneath the share price of any ETF I am in. While paper trading 2018, there is one point in 2018 that shows a ~23% loss. I assumed I would be able to place a trailing stop loss of 10%, and artificially limited the loss for this period at 10%.

Please try to disprove any of this. Corrections and criticism welcomed. Run the numbers yourself.

GLTY