I know it’s incredibly simplistic, but if you dig in with more technical information, the conclusion is the same. JC’s method in particular is very good and today he sold SPXL (3x SP500): +22.6% in 3.5 weeks. When he goes short, it will be wise to follow along.
He is sometimes early, by design, so if you don’t like being early and buying more lower, then remain cautious and be willing to sell to avoid holding underwater. QQQ is similarly “too far, too fast”, whereas SOXX/SOXL may only have a mild pullback on the horizon.
Volatility has been dropping steadily, but it showed its unique ‘personality’ the past 3 days. Yesterday (Monday) and Friday, VIX and UVXY held up while the markets rallied (and PSQ fell), as if ‘not believing’ the rally would last. Late yesterday and today volatility dropped sharply with the markets mostly flat between drops.
Keep that in mind the next time UVXY is pushing up steadily when it ‘should’ be falling along with the markets.
On a daily basis, volatility is still elevated and could fall a lot, but it could also reverse quickly given the markets have gone “too far, too fast” and are likely to pullback.
The simple strategy of buying UVXY (or SQQQ or PSQ) early in the day if they’re moving up continues to work effectively and simply sell if they reverse. Remember, UVXY still gave good gain trade gains from topping out in May.
Nothing goes up or down forever and there could be an extended up move on the horizon, so don’t overstay your welcome with short positions and be willing to re-load long. Catching the full move can be difficult as the recent move in natural gas shows.
It’s been a great short trade with KOLD and should have been easy enough to hold for 26+ (high 26.69), sell on the day since it was “too far, too fast”, or sell at the open the next day for 25 or 24.80 on a stop. Then be patient re-buying, and better yet, buy BOIL off the open yesterday and today, even if you’re certain NG will fall again.
NG can be a difficult trade but the same concepts apply to shorting the markets with PSQ or SQQQ. Good luck the rest of the week!
Update, Fri. October 28: PSQ gapped higher the next day but fell back for a buy/re-buy opportunity and then on Friday, the markets roared back up again, “too far, too fast”.
Perhaps you bought again late Friday or will wait to see what happens on Monday. UVXY continued a steady fall but dropped much less on Friday than SQQQ/PSQ.
The markets are still in “too far, too fast” territory so watch for a chance to buy UVXY or SQQQ or PSQ. And I’ll be watching to buy SDOW to short the Dow.