Weekend Update: Next Week, This Summer

Next Week: Trend Line Resistance

A downtrend line has a negative slope and is formed by connecting two or more high points. The second high must be lower than the first for the line to have a negative slope. Note that at least three points must be connected before the line is considered to be a valid trendline. - Stock Charts.com

This is the daily chart of the Dow as it closed on Friday. I've labeled the there touches (four including the Jan 26th all time high). Note how on Friday prices gapped up to touch the line and then fell all afternoon to close 122 points in the red. It is highly likely that we are in an intermediate term downtrend (slope of the line), while price has hit and was repelled by resistance (3rd touch) and that the next down leg has begun (negative close on Friday). This is pattern recognition in its purest form, i.e., the identification of probable direction by objective observation. There is no room for prices to exceed Friday's highs without invalidating this analysis. The most probable direction for the market next week is down. 

Trading Strategies: Unleveraged Alternatives

In an options oriented trading service it is easy to focus on the nearer term price direction since that is the most relevant to our trading positions. But there are subscribers to this service who don't trade options at all, in fact some don't even trade the leveraged funds, preferring not to trade so much as to invest while using our timing signals to be on the right side of the market trend.  DIA, SPY, QQQ and IWM are all unleveraged, Long market indexes, while DOG, SH, PSQ,  and RWM are inverse, the Short equivalent of those Long and unleveraged indices. The advantages of trading unleveraged ETF's is that volatility is significantly decreased.  

Unleveraged ETF'S will take advantage of accurate timing signals to outperform the market averages, since gains are not just limited to market uptrends, but they also are realized on market downtrends. A spate of accurate market timing signals will make money in both directions, whereas not trying to time the market will result in returns that mirror market returns, including steep retracements such as -82% in Nasdaq back in 2000-2001 and -50% in the S&P and Dow back win 2008. Not many portfolio/savings/retirement accounts can suffer those kinds of losses and end up unscathed in the process.

A step higher in returns takes a step higher in risk, ergo the leveraged ETF's we trade in the intermediate term portfolio. A step further up in leverage and much higher in returns, and risk, are the options we recommend in all time frames. 

Pick a direction (we do that for you), pick a level of risk (your call) and execute. I know its easier said then done, but just get it done. This summer is going to be a whirlwind.