Replies to post #29823 on Cycle Trading

[Duma]

I think I am the wrong person for you to be asking for advice on shorting. It is not in my nature, and I really don't have much experience doing it.

But to try and answer your question you have to remember that the market just wants to go up. And because if this fact my charts I have noticed don't work well for inverse etfs. Dips in the market are usually not that large and very difficult to time. FNGU is up 500% since the end of 2021. I got to ask the question why would you even want to waste your time shorting.

However, market don't go up all the time and with what I think is coming, being able to short might be a good idea. My first rule is to not look at any inverse charts. They don't act like a non-inverse chart and reading them is going to take different rules in my opinion. If I am going to short, I only want to do it when the market is way over bought.

So what I am watching for all the time on my daily or my 60min chart is:
1. A major peak in M65
2. A clear w3 setup.

That did happen in July 2023, but their wasn't much gain to it and it was very choppy. If you are really set on shorting I would prefer a 60min chart for a quick in and out. Eventually a daily will give me some good signals.

So if I do get a short signal say from my QQQ chart, then I will short with SQQQ, but I never look at a chart. I will get my signals and set my stops based on TQQQ or QQQ chart.

Jaws does more shorting then me, maybe he can give you some pointers.

[jaws57]

Here's my take on the M65 question and on shorting in general.
The m65 differs I believe because of the varying decay of the bear etf vs the bull etf. The M65 is a longer, much longer indicator time wise and the decay difference will thro it off easier than a shorter time indicator like M12.
For the longest time I have always used SPY SPX or QQQ to generate signals to trade. Back in the past I would use options a lot of time to trade with, I switched to the leveraged ETFs when they became available. All my backtesting is done on the index charts. On daily charts I use SPY QQQ or IWM to get long or short signals. Thats on the big three. I have found using inverse charts SQQQ/TZA/SPXS put off different signals.
On 60m or less charts I use the SPXL/TQQQ etc
The sector charts are different in that harder to find the "base" chart. Those I still use the bull charts.
Not saying that trading off the inverse bear chart is wrong...Just that using the base charts has worked over the years for me and Duma.

Shorting for me has different rules, For me, using the exact same rules for shorting as going long has gotten me in trouble in the past. Again I use the base/bull chart for signals (big 3). Depending on the chart I wont short above the 50dma, rising m65, weekly chart in uptrend, and some others. Shorts are more violent in price action therefor I like to pounce quicker on a profit or exit.

Commodities are different, I basically have the same rules both long and short.