I told a friend over the weekend to look at buying HNU or BOIL. I hope he did as Monday gave a chance to buy at Friday's best price, and even slightly better. They rallied, fell back, then held flat all day. After hours, NG blasted higher and they were up 25% before the open. I sold out, expecting a dip, bought the dip and they're back up to the pre-open level for an extra 6%. With NG March only up to 1.78, it could easily continue higher, so I will hang on to BOIL but continue to watch for trade opportunities.
Good odds to go short this next week. Markets are looking extended due to a few stocks going parabolic (NVDA). But when you look at the market as a set of stocks such as IWM or equal weight RSP, you see they are actually flat. This year marks one of the largest divergences of the top 5 stocks vs the rest of the market. RSP is +3% while SPY is +14%. QQQE (equal weight) QQQ) is +6% while QQQ is +20%. If you didn't buy NVDA but bought every other stock you are underperforming the indexes by 10% this year.
Often times this leads to one of 2 things, either rotation into the forgotten stocks or a market correction.
VIX is still low signaling no fear and further gains for SPY. However, VIX bottomed on 21MAY and has made a higher low as SPY pushed up. Friday was particularly strange as usually VIX crashes on Fridays, yet it rose with the market. Typically VIX starts to rise before SPY drops. If SPY continues up next week, I expect VIX to climb as people should begin to hedge for a correction. On the 2nd or 3rd day of the correction look for VIX to put in a lower high, or start to fall with SPY to mark the end of the correction.
Great update, pointing out how analysts can be completely wrong. NDX on log scale is a revelation that cannot be ignored. Today is not a bubble, but 1990s was parabolic on a log scale chart. That shows you that things can get way higher than today, but also that once a trendline breaks, you have to accept it and move on. If you shorted NDX in 1997 because it was above a trendline, you lost everything within 2 years as NDX more than doubled. That's the kind of stubbornness some analysts show thinking that the market has to be logical and follow rules. Actually it is the opposite and the only way to deal with it is to follow strict trading rules and ignore logic.
I stick to one time frame (daily) so I don't get too many lines going. Also if you trade on hourly or 30 min, the stops need to be tighter because the rallies are shorter on that time frame. I've reviewed and re-drawn some of my SOXX and SOXL lines after reading your update.
I see you don't have any horizontal support or resistance. Do you think open gaps are important to keep in mind? Some traders say most gaps (80%) eventually get filled by price returning to that level. There are many gaps since 31OCT. I count at least 5 maybe 6. The most obvious one is 22FEB gap up at the open, which the entire market (QQQ / SPY) also share. For that gap to be filled SOXL would need to eventually drop to 36.15. But it could go to 70 first, there is no rule that it has to do it soon. So I have horizontal support at 36.15 and a few other support at gaps such as 43.80 from 20MAR and 28.55 from 17JAN.
Good point to mention that stops should be tighter if trading short time frames. I'm using roughly 1%, but often more with SOXL and less with TQQQ/SQQQ.
I never worry about gaps being filled, but many people do.
I only have horizontal lines drawn when they seem appropriate, like in 2021 for SOXL and SOXX. I currently have a horizontal line through the ATH for QQQ.
I don't have any horizontal lines drawn for SOXL but would say 42.50 or 42.00 would be my first pick, then 39, then 36. Once it goes below 34.50 (Feb.21 low 34.58 then gap up), it's already in a downtrend. That may turn out to be support, but you'd have an array of downtrend lines to guide you.
In fact if Tuesday's low of 38.95 is broken, that would make it a lower high and lower low. I would then be looking to trade either SOXS or SOXL, and not longer considering any SOXL support valid.
I looked into "gap theory". The longer it goes without being filled the less likely it will. Every asset has unfilled gaps, and they exist on smaller time frames than daily, which most people do not realize. Which to me makes this theory sound more superstitious than real. I reviewed NVDA and AAPL, and they have dozens of unfilled gaps going back years. Following gap theory gives you a bias of bearishness as you are expecting a decline, where in fact a gap is quite bullish. Just look at the past 5 months with all the gaps at open.
So, in the mindset of eliminating sources of confusion and bias, I deleted the horizontal "support" lines at gaps.
Good info. I thought it was simply a technical concept with no basis in 'reality'. I mean, if a stock gaps way up after blow out earnings, why would it then need to close the gap? I've never noticed other gaps filling either, but wasn't really looking.
The main problem with analysts is they try to predict what will happen. Of course Avi is one of the better ones as he claims to have an alternate prediction and use stops. But every trade should have a defined entry and exit before you click the Buy button. With the trendlines we use, we aren't predicting if it will go towards the top one or bottom one. We definitely aren't picking price targets like everyone else.
Every trendline gets broken eventually. When I buy I have no idea if it will be profitable. In fact, my backtest shows most of my trades will NOT be profitable. But limiting losses allows a small number of large wins to compound a portfolio.
Excellent points, and I would add that keeping their predictions in mind will often make your trades more difficult and have you looking in the wrong direction. Just before the turn in October, last year, Avi turned very bearish. Yes, he had an alternative move higher but he was definitely looking for a continued move down and missed the hard move up. He is now expecting a major top this year and I added his targets to my charts in order to have a clear visual image. I find the trendlines provide a much clearer 'view of the road ahead' and generally have you safely on the sidelines long before Avi's targets are hit. You'll see them in my update today.
JC Rochester also has an excellent trading system but it includes buying more as the price gets cheaper, which is quite clearly a bad idea, even though it is widely followed and promoted. Last week he commented, "2024-03-19, #sold# SOXS (3X bear Semis) : +37% in 9 sessions, K- ($2.81 bought 2024-03-07) → R5+, EMA20 ($3.85 sold 2024-03-19)". +37% in 9 sessions is pretty great, but he has 3 other batches still underwater. "Yes, remaining 3 of halves batches for SOXS on account of US aggregate market dipping sideways until July."
He's never been the least bit concerned with them, and perhaps they will eventually be profitable, like LABU that he held for a year. "+13.4% in 1 year EMA20 ($154 bought 2023-01-24) → K+, R14+ ($174.60 sold 2024-02-27)". On Feb. 2, 2023, he could have sold for $188, +22.1% in 7 sessions. Selling as it dropped for a lesser gain would have made sense. Holding it all the way down to 48.40 (-68.6%) on Oct. 31 is simply a bad strategy. Buying at 64.00 on Nov. 17 when the downtrend was possibly broken, provided a +172.8% gain in just over 3 months. And remember that holding LABU for a 68% drop meant he wasn't holding LABD for gains of 57% and 115%.
When JC sold his SOXS at 3.85 for +37% in 9 sessions, he was still holding his first buy at $10.10, -61.9%. There is absolutely no logical reason for holding shares through such a drop. If your strategy includes such occurrences, then you really need to change your strategy. For reference, here's JC's earlier SOXS buys and comments. And remember he then missed the huge move in SOXL. And for further reference, he bought BOIL "2023-11-08, 1:33 #bought# BOIL (2X Natural Gas) 1/2 of 1st batch $51.98" (low 51.96 at 12:50, up to 54.20, close 54.17) (big gap lower next day and next, Fri. Nov.10 to 50.01) Mon. Nov.13 high 54.79, close 54.43, gap lower Tues. rallied and fell to 50.56). He again could have sold for a gain and it recently hit a low of 13.28 (-74.5%).
JC 2023-11-09 #bought# SOXS (3X bear Semis) 1/2 of 1st batch $10.10 condition : R5-, -k, EMA200 | PPO+ ; 2023-11-10 Felicitously, Growths sectors, QQQ, finally OX+ today. Therefore, it will continue to ascend until K+ > 4 weeks ... Halloween effect 2023 is normally intact. No worries for nascent 3x bear ETFs previously bought at R5-. Sell next week at {EMA20, > R50+} for taking profits e.g. SOXS < $11.40, next 4 days or shorter ; Nov.20 For bear ETFs, I am disposed to additional purchases at ADD+900 US markets & K+ e.g. SOXS (3x bear Semis) < $7.80 (esp. -1ATR) 2020-11-20 ; 2023-11-30 ADD+900 extreme high #bought# SOXS (3x bear Semis) 2/2 of 1st batch $8.23 ; 2023-12-29 #bought# SOXS (3x bear Semis) 1/2 of 2nd batch $5.65 condition : K-, R14- | PPO- ; 2024-01-03 #sold# SOXS (3x bear Semis) : +22% on 3 sessions K-, R14- ($5.65 bought 2023-12-29) → R5+, EMA20 ($6.90 sold 2024-01-03) ; Jan. 19 No worries for bear ETFs . In coming February will deliver sprouts, anticipating +dvP. In the interim, buy bargains at [K-, R14-] resembling 2023-07 through 2023-08 bear rally ... perhaps esp. [wK-, wR14-] in future for colossal profits
Good reminders on JC and Avi. I think the difficulty people have is that they feel obligated to trust someone who seems to regularly beat the market. However, neither of them are sharing their TOTAL return on their net worth or trading account. If they are making 30% CAGR on only 10% of their money, and the rest is in cash, SPY or whatever, then they are barely getting 10% CAGR. Even if they are getting 20% CAGR, I would argue they could get that just by putting all their money in QQQ and trading 1-2 times per year when it is a high probability trade.
JC seems to average about 10% per month on trades which are closed in 1 month, but I don't know how many open positions he has like LABU, SOXS, BOIL, NIO, etc which are way underwater for several months. So maybe he averages about 30-50% CAGR on trading which is amazing, but using some basic stops could average 75%. But then I again point out, why is he trading only some of his money and not all, and why not focus on 5-10 assets instead 50-100?
My subscription to SA ends in 92 days. I'll be glad to not have that temptation anymore. Honestly, I should be able to stop looking at it as I intended at the start of the year. But clearly I have not been 100% confident in my abilities to trade my system yet. SA is what led me indirectly to develop my trading strategy, so I think there may be other things to learn which is why I keep going back. Once I get a big win on a trade, I'm sure the desire to look at SA will go away. I've already had several wins on smaller positions, and the past 5 months have seen live testing yield 188% if I had used full positions of SOXL. I'm very close to being 100% confident.
I had to sell my SOXS at 3.41 pre-market to breakeven. SOXL gapped up 5% at the open, so I set a trailing buy in case it just went down. Instead it went up to 45.05 and triggered my buy order, went up a little more, then dropped and triggered the sell order. This was worst-case scenario of losing both trades in a couple hours, but necessary risk management. I don't know how I could have played it any different. Selling SOXS for breakeven after several days was a must, since it lost all its momentum. SOXL rising >45 was a good sign coming off support.
Now it appears we may be in a trading range, though technically still a downtrend as today's high was lower than 5 of the last 6 days. I will not make another trade today and wait for tomorrow. SOXL would be a buy > 45.00 tomorrow. I have learned to just move on and always take the next trade or I will miss the one that counts. SOXS may come back into the picture if SOXX breaks its primary trend.
I have SOXX right at support at the close today. I bought a 1/3 position. For tomorrow I have SOXL buy > 44.70 for a breakout. I would buy the other 2/3 at that point, or later in the week if support holds. If SOXX gaps down I am out 1/3 of the loss of a full order. If it gaps up, I will likely buy right around 44.70 anyways.
Generally buying support in a bull trend is the right thing to do. SOXX is there now and has an open red candle after a few down days. That's usually a short-term bottom.
I'm still in SOXS as the momentum hasn't triggered a stop signal yet, but I think I could have sold and switched to SOXL Friday. Either way is justified. But if SOXL continues down early Monday then SOXL must be sold immediately as that would be the beginning of the primary trend breaking down.
Friday was also interesting because SOXL was barely down but TQQQ was down much more. Usually, it's the opposite.
A large gap up to open Monday is not out of the question and will put everyone in a tough position. Do you sell SOXS for a small loss? Do you Buy SOXL if it opens +8%? A gap down is much easier. I just tighten my SOXS stop and continue to wait for SOXL to find a bottom.
What do you mean by "has an open red candle after a few down days"? And on what time frame?
I agree, either hold from Friday makes sense, and agree SOXL must be sold on a drop, then simply put in a stop buy for a reversal. If there's a gap up open, I think you have to look to switch quickly. Friday afternoon had a ceiling of 43.55 (+2.0% from the close). The 10am rally on Thursday hit 45.04 (+5.5% from Friday's close). A look back to Feb. 28 - Mar. 1, shows what could happen Mon. - Tues. from the setup on Friday. Conversely, there might be support at 41 and 39.
For me, the gap down on Friday was easier to buy since it was nearing support Thursday and the gap lower Friday put it down at support. A gap lower on Monday breaks support, so I'd be less inclined to buy like I did on Friday. Then I'd watch for support at 41 and 39.
The open (hollow) red candle is on the daily chart. An open (hollow) candle is when the closing price is higher than the open price. Red of course is a close lower than the previous close. If you look at any downtrend of at least 3 days with an open red candle, the next day is green about 75% of the time, or so it appears to me. If you narrow your search to look at pivot points in a downtrend, a disproportionate amount of them are open red candles. I haven't studied it much just an observation.
I agree with the 41 and 39 potential supports, but I don't have any limit orders
Nice update. It's good to see trends following lines across multiple timelines to prove the concept. Some analysts call it fractal in nature. The lines are there to be used however we wish. One concept I've had is to buy TQQQ at support, then switch to QQQ at resistance. But if support fails, the stop loss goes into effect. This would minimize trading and keep you in QQQ during 2021.
I think you'd have better success trading only TQQQ and even going short with SQQQ if you want. QQQ provides great perspective on the monthly chart and respecting the trendlines back to 2010 is clearly important. Following TQQQ on a daily chart from April, 2020. That had you selling on Sept. 2 or 3, and going short Sept. 3.
By November, there were points for a new uptrend channel. It went above that in Jan.-Feb. 2021, then fell hard for 3 weeks, which was a contributing reason for me looking for a repeat this year. By April, the channel on the daily chart was firmly established and provided excellent guidance, through to November, 2021.
With the new view with log scale, it seems everything suggested in this article still holds true and the log scale simply provides improved guidance.
Great article. I would have sold on the bearish candle on 13JUL2020 and bought back in a couple week later, then sold on 03SEP2020. Sometimes it can be hard to get back in so plan to buy at channel support. If you miss selling on the peak, and it drops below channel support, I sell for sure.
You could add some of the downtrends for readers to see why you bought back in at certain prices.
I'm glad to see you've got the final piece to the puzzle, and with it, confidence. It really is upsetting to have a plan then once the market opens you goof up and don't follow it. But now you can trade relaxed and make better decisions. I am going down that same path, trading TQQQ, SOXL, TNA, and GDXU based on trendlines. 2024 has been good for TQQQ and SOXL, but TNA and GDXU have dropped relentlessly.
A good skill to learn is stop losses in case the support you thought was a good buy turns out to be a drop instead the next day. A good example is IWM - it found its way to the trendline support and bounced, but then reversed a couple days later on 16JAN2025 and broke the trend - time to sell.
But back to QQQ. It bounced off a trendline today and closed above. If it drops further, you likely sell for breakeven if you bought 08JAN. No worries.
I bought SOXL on 08JAN2024. It has mostly gone sideways and I have sell stop at breakeven 26.67. The 1X SOXX has a clear trendline for me with support around 548 the next couple days. If it breaks support, likely my stop sell triggers.
Thanks. For inexperienced investors and those wishing to make minimum trades, I would suggest only looking at TQQQ or TECL. Others, like SOXL, TNA, GDXU, don't have a smooth enough trend and it's very difficult to make minimum trades and not get caught in a gap move lower.
For those same investors, I wouldn't have sold July 13, 2020. Yes, it could have continued lower, but it's not a lot different than June 11 or even April 21. From about Aug. 20, it starts to get a bit parabolic and you've made a really good return. That's why I picked Sept. 3 as an absolute sell day.
I would also compare Sept. 3, 2020 with Fri. June 16, 2023. That was also getting a bit parabolic and had made a large run in a short period of time.
Now, and going forward, it's important to realize that 2024 could be like 2022. The current lower high is very similar to July 2023, and today could have matched Aug. 2, but it hit the support line and rallied. Seeing that line as it fell was super helpful and made for a relaxed day. Similarly with SOXL, it fell hard to support and held.
Everyone trying to make minimum trades should still be long TQQQ from buying Jan. 8 at the open. A stop at 47 and watching tomorrow to see if it moves higher would be wise.
I told a friend over the weekend to look at buying HNU or BOIL. I hope he did as Monday gave a chance to buy at Friday's best price, and even slightly better. They rallied, fell back, then held flat all day. After hours, NG blasted higher and they were up 25% before the open. I sold out, expecting a dip, bought the dip and they're back up to the pre-open level for an extra 6%. With NG March only up to 1.78, it could easily continue higher, so I will hang on to BOIL but continue to watch for trade opportunities.
Good odds to go short this next week. Markets are looking extended due to a few stocks going parabolic (NVDA). But when you look at the market as a set of stocks such as IWM or equal weight RSP, you see they are actually flat. This year marks one of the largest divergences of the top 5 stocks vs the rest of the market. RSP is +3% while SPY is +14%. QQQE (equal weight) QQQ) is +6% while QQQ is +20%. If you didn't buy NVDA but bought every other stock you are underperforming the indexes by 10% this year.
Often times this leads to one of 2 things, either rotation into the forgotten stocks or a market correction.
VIX is still low signaling no fear and further gains for SPY. However, VIX bottomed on 21MAY and has made a higher low as SPY pushed up. Friday was particularly strange as usually VIX crashes on Fridays, yet it rose with the market. Typically VIX starts to rise before SPY drops. If SPY continues up next week, I expect VIX to climb as people should begin to hedge for a correction. On the 2nd or 3rd day of the correction look for VIX to put in a lower high, or start to fall with SPY to mark the end of the correction.
Great update, pointing out how analysts can be completely wrong. NDX on log scale is a revelation that cannot be ignored. Today is not a bubble, but 1990s was parabolic on a log scale chart. That shows you that things can get way higher than today, but also that once a trendline breaks, you have to accept it and move on. If you shorted NDX in 1997 because it was above a trendline, you lost everything within 2 years as NDX more than doubled. That's the kind of stubbornness some analysts show thinking that the market has to be logical and follow rules. Actually it is the opposite and the only way to deal with it is to follow strict trading rules and ignore logic.
I stick to one time frame (daily) so I don't get too many lines going. Also if you trade on hourly or 30 min, the stops need to be tighter because the rallies are shorter on that time frame. I've reviewed and re-drawn some of my SOXX and SOXL lines after reading your update.
I see you don't have any horizontal support or resistance. Do you think open gaps are important to keep in mind? Some traders say most gaps (80%) eventually get filled by price returning to that level. There are many gaps since 31OCT. I count at least 5 maybe 6. The most obvious one is 22FEB gap up at the open, which the entire market (QQQ / SPY) also share. For that gap to be filled SOXL would need to eventually drop to 36.15. But it could go to 70 first, there is no rule that it has to do it soon. So I have horizontal support at 36.15 and a few other support at gaps such as 43.80 from 20MAR and 28.55 from 17JAN.
Good point to mention that stops should be tighter if trading short time frames. I'm using roughly 1%, but often more with SOXL and less with TQQQ/SQQQ.
I never worry about gaps being filled, but many people do.
I only have horizontal lines drawn when they seem appropriate, like in 2021 for SOXL and SOXX. I currently have a horizontal line through the ATH for QQQ.
I don't have any horizontal lines drawn for SOXL but would say 42.50 or 42.00 would be my first pick, then 39, then 36. Once it goes below 34.50 (Feb.21 low 34.58 then gap up), it's already in a downtrend. That may turn out to be support, but you'd have an array of downtrend lines to guide you.
In fact if Tuesday's low of 38.95 is broken, that would make it a lower high and lower low. I would then be looking to trade either SOXS or SOXL, and not longer considering any SOXL support valid.
I looked into "gap theory". The longer it goes without being filled the less likely it will. Every asset has unfilled gaps, and they exist on smaller time frames than daily, which most people do not realize. Which to me makes this theory sound more superstitious than real. I reviewed NVDA and AAPL, and they have dozens of unfilled gaps going back years. Following gap theory gives you a bias of bearishness as you are expecting a decline, where in fact a gap is quite bullish. Just look at the past 5 months with all the gaps at open.
So, in the mindset of eliminating sources of confusion and bias, I deleted the horizontal "support" lines at gaps.
Good info. I thought it was simply a technical concept with no basis in 'reality'. I mean, if a stock gaps way up after blow out earnings, why would it then need to close the gap? I've never noticed other gaps filling either, but wasn't really looking.
The main problem with analysts is they try to predict what will happen. Of course Avi is one of the better ones as he claims to have an alternate prediction and use stops. But every trade should have a defined entry and exit before you click the Buy button. With the trendlines we use, we aren't predicting if it will go towards the top one or bottom one. We definitely aren't picking price targets like everyone else.
Every trendline gets broken eventually. When I buy I have no idea if it will be profitable. In fact, my backtest shows most of my trades will NOT be profitable. But limiting losses allows a small number of large wins to compound a portfolio.
Excellent points, and I would add that keeping their predictions in mind will often make your trades more difficult and have you looking in the wrong direction. Just before the turn in October, last year, Avi turned very bearish. Yes, he had an alternative move higher but he was definitely looking for a continued move down and missed the hard move up. He is now expecting a major top this year and I added his targets to my charts in order to have a clear visual image. I find the trendlines provide a much clearer 'view of the road ahead' and generally have you safely on the sidelines long before Avi's targets are hit. You'll see them in my update today.
JC Rochester also has an excellent trading system but it includes buying more as the price gets cheaper, which is quite clearly a bad idea, even though it is widely followed and promoted. Last week he commented, "2024-03-19, #sold# SOXS (3X bear Semis) : +37% in 9 sessions, K- ($2.81 bought 2024-03-07) → R5+, EMA20 ($3.85 sold 2024-03-19)". +37% in 9 sessions is pretty great, but he has 3 other batches still underwater. "Yes, remaining 3 of halves batches for SOXS on account of US aggregate market dipping sideways until July."
He's never been the least bit concerned with them, and perhaps they will eventually be profitable, like LABU that he held for a year. "+13.4% in 1 year EMA20 ($154 bought 2023-01-24) → K+, R14+ ($174.60 sold 2024-02-27)". On Feb. 2, 2023, he could have sold for $188, +22.1% in 7 sessions. Selling as it dropped for a lesser gain would have made sense. Holding it all the way down to 48.40 (-68.6%) on Oct. 31 is simply a bad strategy. Buying at 64.00 on Nov. 17 when the downtrend was possibly broken, provided a +172.8% gain in just over 3 months. And remember that holding LABU for a 68% drop meant he wasn't holding LABD for gains of 57% and 115%.
When JC sold his SOXS at 3.85 for +37% in 9 sessions, he was still holding his first buy at $10.10, -61.9%. There is absolutely no logical reason for holding shares through such a drop. If your strategy includes such occurrences, then you really need to change your strategy. For reference, here's JC's earlier SOXS buys and comments. And remember he then missed the huge move in SOXL. And for further reference, he bought BOIL "2023-11-08, 1:33 #bought# BOIL (2X Natural Gas) 1/2 of 1st batch $51.98" (low 51.96 at 12:50, up to 54.20, close 54.17) (big gap lower next day and next, Fri. Nov.10 to 50.01) Mon. Nov.13 high 54.79, close 54.43, gap lower Tues. rallied and fell to 50.56). He again could have sold for a gain and it recently hit a low of 13.28 (-74.5%).
JC 2023-11-09 #bought# SOXS (3X bear Semis) 1/2 of 1st batch $10.10 condition : R5-, -k, EMA200 | PPO+ ; 2023-11-10 Felicitously, Growths sectors, QQQ, finally OX+ today. Therefore, it will continue to ascend until K+ > 4 weeks ... Halloween effect 2023 is normally intact. No worries for nascent 3x bear ETFs previously bought at R5-. Sell next week at {EMA20, > R50+} for taking profits e.g. SOXS < $11.40, next 4 days or shorter ; Nov.20 For bear ETFs, I am disposed to additional purchases at ADD+900 US markets & K+ e.g. SOXS (3x bear Semis) < $7.80 (esp. -1ATR) 2020-11-20 ; 2023-11-30 ADD+900 extreme high #bought# SOXS (3x bear Semis) 2/2 of 1st batch $8.23 ; 2023-12-29 #bought# SOXS (3x bear Semis) 1/2 of 2nd batch $5.65 condition : K-, R14- | PPO- ; 2024-01-03 #sold# SOXS (3x bear Semis) : +22% on 3 sessions K-, R14- ($5.65 bought 2023-12-29) → R5+, EMA20 ($6.90 sold 2024-01-03) ; Jan. 19 No worries for bear ETFs . In coming February will deliver sprouts, anticipating +dvP. In the interim, buy bargains at [K-, R14-] resembling 2023-07 through 2023-08 bear rally ... perhaps esp. [wK-, wR14-] in future for colossal profits
Good reminders on JC and Avi. I think the difficulty people have is that they feel obligated to trust someone who seems to regularly beat the market. However, neither of them are sharing their TOTAL return on their net worth or trading account. If they are making 30% CAGR on only 10% of their money, and the rest is in cash, SPY or whatever, then they are barely getting 10% CAGR. Even if they are getting 20% CAGR, I would argue they could get that just by putting all their money in QQQ and trading 1-2 times per year when it is a high probability trade.
JC seems to average about 10% per month on trades which are closed in 1 month, but I don't know how many open positions he has like LABU, SOXS, BOIL, NIO, etc which are way underwater for several months. So maybe he averages about 30-50% CAGR on trading which is amazing, but using some basic stops could average 75%. But then I again point out, why is he trading only some of his money and not all, and why not focus on 5-10 assets instead 50-100?
My subscription to SA ends in 92 days. I'll be glad to not have that temptation anymore. Honestly, I should be able to stop looking at it as I intended at the start of the year. But clearly I have not been 100% confident in my abilities to trade my system yet. SA is what led me indirectly to develop my trading strategy, so I think there may be other things to learn which is why I keep going back. Once I get a big win on a trade, I'm sure the desire to look at SA will go away. I've already had several wins on smaller positions, and the past 5 months have seen live testing yield 188% if I had used full positions of SOXL. I'm very close to being 100% confident.
I had to sell my SOXS at 3.41 pre-market to breakeven. SOXL gapped up 5% at the open, so I set a trailing buy in case it just went down. Instead it went up to 45.05 and triggered my buy order, went up a little more, then dropped and triggered the sell order. This was worst-case scenario of losing both trades in a couple hours, but necessary risk management. I don't know how I could have played it any different. Selling SOXS for breakeven after several days was a must, since it lost all its momentum. SOXL rising >45 was a good sign coming off support.
Now it appears we may be in a trading range, though technically still a downtrend as today's high was lower than 5 of the last 6 days. I will not make another trade today and wait for tomorrow. SOXL would be a buy > 45.00 tomorrow. I have learned to just move on and always take the next trade or I will miss the one that counts. SOXS may come back into the picture if SOXX breaks its primary trend.
I have SOXX right at support at the close today. I bought a 1/3 position. For tomorrow I have SOXL buy > 44.70 for a breakout. I would buy the other 2/3 at that point, or later in the week if support holds. If SOXX gaps down I am out 1/3 of the loss of a full order. If it gaps up, I will likely buy right around 44.70 anyways.
Generally buying support in a bull trend is the right thing to do. SOXX is there now and has an open red candle after a few down days. That's usually a short-term bottom.
I'm still in SOXS as the momentum hasn't triggered a stop signal yet, but I think I could have sold and switched to SOXL Friday. Either way is justified. But if SOXL continues down early Monday then SOXL must be sold immediately as that would be the beginning of the primary trend breaking down.
Friday was also interesting because SOXL was barely down but TQQQ was down much more. Usually, it's the opposite.
A large gap up to open Monday is not out of the question and will put everyone in a tough position. Do you sell SOXS for a small loss? Do you Buy SOXL if it opens +8%? A gap down is much easier. I just tighten my SOXS stop and continue to wait for SOXL to find a bottom.
What do you mean by "has an open red candle after a few down days"? And on what time frame?
I agree, either hold from Friday makes sense, and agree SOXL must be sold on a drop, then simply put in a stop buy for a reversal. If there's a gap up open, I think you have to look to switch quickly. Friday afternoon had a ceiling of 43.55 (+2.0% from the close). The 10am rally on Thursday hit 45.04 (+5.5% from Friday's close). A look back to Feb. 28 - Mar. 1, shows what could happen Mon. - Tues. from the setup on Friday. Conversely, there might be support at 41 and 39.
For me, the gap down on Friday was easier to buy since it was nearing support Thursday and the gap lower Friday put it down at support. A gap lower on Monday breaks support, so I'd be less inclined to buy like I did on Friday. Then I'd watch for support at 41 and 39.
The open (hollow) red candle is on the daily chart. An open (hollow) candle is when the closing price is higher than the open price. Red of course is a close lower than the previous close. If you look at any downtrend of at least 3 days with an open red candle, the next day is green about 75% of the time, or so it appears to me. If you narrow your search to look at pivot points in a downtrend, a disproportionate amount of them are open red candles. I haven't studied it much just an observation.
I agree with the 41 and 39 potential supports, but I don't have any limit orders
Thanks! Great information to keep in mind.
Nice update. It's good to see trends following lines across multiple timelines to prove the concept. Some analysts call it fractal in nature. The lines are there to be used however we wish. One concept I've had is to buy TQQQ at support, then switch to QQQ at resistance. But if support fails, the stop loss goes into effect. This would minimize trading and keep you in QQQ during 2021.
I think you'd have better success trading only TQQQ and even going short with SQQQ if you want. QQQ provides great perspective on the monthly chart and respecting the trendlines back to 2010 is clearly important. Following TQQQ on a daily chart from April, 2020. That had you selling on Sept. 2 or 3, and going short Sept. 3.
By November, there were points for a new uptrend channel. It went above that in Jan.-Feb. 2021, then fell hard for 3 weeks, which was a contributing reason for me looking for a repeat this year. By April, the channel on the daily chart was firmly established and provided excellent guidance, through to November, 2021.
With the new view with log scale, it seems everything suggested in this article still holds true and the log scale simply provides improved guidance.
Great article. I would have sold on the bearish candle on 13JUL2020 and bought back in a couple week later, then sold on 03SEP2020. Sometimes it can be hard to get back in so plan to buy at channel support. If you miss selling on the peak, and it drops below channel support, I sell for sure.
You could add some of the downtrends for readers to see why you bought back in at certain prices.
I'm glad to see you've got the final piece to the puzzle, and with it, confidence. It really is upsetting to have a plan then once the market opens you goof up and don't follow it. But now you can trade relaxed and make better decisions. I am going down that same path, trading TQQQ, SOXL, TNA, and GDXU based on trendlines. 2024 has been good for TQQQ and SOXL, but TNA and GDXU have dropped relentlessly.
A good skill to learn is stop losses in case the support you thought was a good buy turns out to be a drop instead the next day. A good example is IWM - it found its way to the trendline support and bounced, but then reversed a couple days later on 16JAN2025 and broke the trend - time to sell.
But back to QQQ. It bounced off a trendline today and closed above. If it drops further, you likely sell for breakeven if you bought 08JAN. No worries.
I bought SOXL on 08JAN2024. It has mostly gone sideways and I have sell stop at breakeven 26.67. The 1X SOXX has a clear trendline for me with support around 548 the next couple days. If it breaks support, likely my stop sell triggers.
Thanks. For inexperienced investors and those wishing to make minimum trades, I would suggest only looking at TQQQ or TECL. Others, like SOXL, TNA, GDXU, don't have a smooth enough trend and it's very difficult to make minimum trades and not get caught in a gap move lower.
For those same investors, I wouldn't have sold July 13, 2020. Yes, it could have continued lower, but it's not a lot different than June 11 or even April 21. From about Aug. 20, it starts to get a bit parabolic and you've made a really good return. That's why I picked Sept. 3 as an absolute sell day.
I would also compare Sept. 3, 2020 with Fri. June 16, 2023. That was also getting a bit parabolic and had made a large run in a short period of time.
Now, and going forward, it's important to realize that 2024 could be like 2022. The current lower high is very similar to July 2023, and today could have matched Aug. 2, but it hit the support line and rallied. Seeing that line as it fell was super helpful and made for a relaxed day. Similarly with SOXL, it fell hard to support and held.
Everyone trying to make minimum trades should still be long TQQQ from buying Jan. 8 at the open. A stop at 47 and watching tomorrow to see if it moves higher would be wise.