2-12-15 – Trading Strategy
– No current holdings
DGAZ (Inverse Natural Gas) Stopped out @ $7.75 for a 17.65% loss
– Today was a bitter surprise. Only being down 2% yesterday with a conservative stop loss was no match for the enormous 15% moring gap down! I was highlighting the fact UGAZ never had more than 3 up days since November, well it broke that today.
As a trader who holds positions overnight, there is simply no protection against this. It’s a coin flip as it could have easily gapped up and I would have been on the winning side. I’ve certainly been the beneficiary of this in the past. It’s a statistical game, and every now and then we get pinched by an anomaly.
I’m still up for the month and assessing the situation, there isn’t really anything that could have been done differently as the overall trend was down and we just had a bad move against the position. This could mean that UGAZ (Natural Gas) could be reversing and that will provide more than enough movement to make up for today’s loss and then some. Unfortunately, one day doesn’t signal a complete reversal, so I have to wait until the direction becomes more clear.
Brazil gapped lower today and flew far past my buy point in BZQ.
Russia teased our buy point missing by a couple percentage points of a buy as well as Semi conductors.
Stocks on the Watch
Longer Term (30+ day) Trade alert!
UGAZ (Natural Gas) has made a move that has certainly caught my eye (and no.. it wasn’t just the big gut check loss =) but it’s done something I look for in longer term trades, it’s just started what I call an “Extreme PPO Turnover”
PPO (Price Percent Oscillator) measures the distances between two major moving averages. In this case, I have it configured to measure the percentage distance between the 20-day and 50-day moving averages. I use the percentage difference because I can easily apply that to all of the markets I watch to find out historically what is actually and “extreme”
Right now, UGAZ is changing direction from a WHOPPING 41.21% difference in moving averages. The only other stock currently matching this extreme is GASL (Natural Gas Companies).
The only other two markets that have reached this extreme have been RUSL (Russia) and JNUG (Junior Gold Miners)
If you look at JNUG and got in when PPO turned and held it, you could have been up as high as 110%!!
If the volatility is too much to bear, you could have done the same with GDXJ (Non Leveraged Junior Gold Miners) but that same movement was only 26%
Now this is not foolproof. RUSL (Russia) also had an extreme PPO turn over, but instead of trending, it move upward and then into a sideways consolidation. Because PPO is measuring the distance between two moving averages, the averages can flatten out or “appear” to be changing direction when prices move sideways. So you can’t look at the indicator solely, but the actual price action.
If we look at UGAZ (Natural Gas), PPO is reversing because price is changing direction, and FAST! The possible upside could easily be 100%+ if one has the stomach to hold for any potential volatility. Also, it could just simply move sideways like RUSL (Russia).
If you want to start investing in Natural Gas, but don’t want the exposure the leveraged ETF, UGAZ, provides, look at investing in UNG (Non leveraged Natural Gas) as an alternative.
Open orders for 2/12/15
Buy BZQ (Inverse Brazil) @ $91.15
Sell BZQ (Inverse Brazil) @ $96.15
Brazil is showing a clear breakout to the downside which is why I’ve been trying to get in to BZQ. Pushing up my buy order to where I wanted to sell today.
Updated Buy/Sell areas for BZQ (Inverse Brazil)
Buy RUSS (Inverse Russia) @ $13.35
Sell RUSS (Inverse Russia) @ $14.70
– Keeping the same buy/sell order for Inverse Russia as yesterday. It’s starting to slow down in momentum as it’s flirting with it’s price resistance line.
Buy SOXS (Inverse US Semi Conductors) Limit @ $12.15
Sell SOXS (Inverse US Semi Conductors) Limit @ $13.30
– SOXL (Semi Conductors) is slowing down quickly as it’s unable to break resistance. I’m increasing my sell order as this could easy drop quickly if resistance holds and increase potential earnings in SOXS (Inverse Semi Conductors).
Updated Buy/Sell points for SOXS
Buy DGLD (Inverse Gold) @ $68.00
Sell DGLD (Inverse Gold) @ $71.75
– I’m still bearish on gold. Trying to find a good position to get in after it gapped away from my original buy point last Friday.
- Price is below all 3 major moving averages
- Price has broken out of our intermediate term uptrend
- Price remains solid within our long term down trend lines
- PPO has been negative over over a week now
All indications gold will continue to go down. Depending on your trade personality, you may already be in, you may just put in a market order and ride out the volatility, or you can try like me and get the cheaper buy points.
My Buy/Sell points for DGLD (Inverse Gold)