Determine Market Trend (27 May 16)

Moving averages help identify trends and find areas for entering trades.  When the SMA rises, it shows that the crowd is becoming more optimistic and bullish, which is a good time to be long.  When it falls, it shows that the crowd is becoming more pessimistic and bearish.

Short-Term Trend

When the stock trades above the 20-SMA, it is considered to be in a short-term uptrend.  When it trades below the 20-SMA, the short-term trend is considered down. 

Benchmark	Symbol	Price	20-SMA	Market Trend
S&P 500	SPY	210.24	206.51	Uptrend
Dow 30	DIA	178.50	176.84	Uptrend
Russell 2000	IWM	114.60	111.33	Uptrend
Nasdaq 100	QQQ	110.13	106.64	Uptrend

If the short-term trend is up, use bullish leveraged ETFs.  If the short-term trend is down, use inverse leveraged ETFs.

Intermediate Trend

The 50-SMA is considered a measure of the intermediate trend of the market.  This one is very important for market timing and is often used as a place where you enter the market.

Benchmark	Symbol	Price	50-SMA	Market Trend
S&P 500	SPY	210.24	206.48	Uptrend
Dow 30	DIA	178.50	177.25	Uptrend
Russell 2000	IWM	114.60	111.13	Uptrend
Nasdaq 100	QQQ	110.13	108.05	Uptrend

When a stock trades above a rising 50-SMA it may be in a stronger, more mature uptrend.

Long-Term Trend

The “big dog” of moving averages is the 100-day moving average.  If the index is trading above that level, the long-term trend is considered up; generally, the 100-day moving average is seen as a proxy for the long-term trend.

Benchmark	Symbol	Price	100-DMA	Market Trend
S&P 500	SPY	210.24	199.35	Uptrend
Dow 30	DIA	178.50	170.61	Uptrend
Russell 2000	IWM	114.60	106.54	Uptrend
Nasdaq 100	QQQ	110.13	105.31	Uptrend

In an up-trending market, I will lengthen holding times and give my holdings more room to run.  In a down-trending market, I use short holding times and grab profits quickly. 

Ratio Chart (SPY:$VIX): ST Uptrend

The SPY:$VIX ratio chart is best used to identify market bottoms. Each time the Percentage Price Oscillator (PPO 1,10,0) reading moves below -10 the S&P 500 (SPY) has reached a short-term market bottom.

Volatility Index (27 May 16): $VIX 4.10

The VIX has an inverse relationship to the price of the S&P 500. Thus, we often see the VIX making new highs as the market is making new lows. When the 2-period RSI of the VIX is above 90 we'll be looking to go long.

Leveraged ETFs (27 May 16): JDST $23.46

Buy (106) shares JDST @ $23.46
Target Price (10%): $25.80

Leveraged ETFs (27 May 16): SOXL $28.96

Buy (87) shares SOXL @ $28.96
Target Price (10%): $31.85

Leveraged ETFs (27 May 16): LABU $34.41

Buy (73) shares LABU @ $34.41
Target Price (10%): $37.85

Leveraged ETFs (27 May 16): TNA $63.47

Buy (40) shares TNA @ $63.47
Target Price (10%): $69.90

Determine Market Trend (13 May 16)

Bull Market, Pullback, Correction and Bear Market

(1)     Pullback: -5% off 52W High   (2) Correction: -10% off 52W High   (3) Bear Market: -20% off 52W High

Benchmark	Symbol	% off 52-Wk High	Market Trend
S&P 500	SPY	-2.92%	Bull Market
Dow 30	DIA	-3.27%	Bull Market
Nasdaq 100	QQQ	-8.31%	Pullback
Russell 2000	IWM	-13.84%	Correction

Although your ultimate goal is to use the stock market to build wealth, you must also avoid losing money.  Knowing how to read the market as a whole will help you to prosper during bull markets and protect assets during bear markets.

Long-Term Trend

The “big dog” of moving averages is the 100-day moving average.  If the index is trading above that level, the long-term trend is considered up; generally, the 100-day moving average is seen as a proxy for the long-term trend.

Benchmark	Symbol	Price	100-DMA	Market Trend
S&P 500	SPY	204.76	198.98	Uptrend
Dow 30	DIA	175.48	170.27	Uptrend
Nasdaq 100	QQQ	105.50	105.73	Downtrend
Russell 2000	IWM	109.64	106.65	Uptrend

In an up-trending market, I will lengthen holding times and give my holdings more room to run.  In a down-trending market, I use short holding times and grab profits quickly. 

  Short-Term Trend

Short-term trends can be captured using short-term moving averages.  The 20-day moving average provides you a simple yet effective way for knowing what side of the market you should be trading.

Benchmark	Symbol	Price	20-DMA	Market Trend
S&P 500	SPY	204.76	207.49	Downtrend
Dow 30	DIA	175.48	178.41	Downtrend
Nasdaq 100	QQQ	105.50	107.41	Downtrend
Russell 2000	IWM	109.64	112.37	Downtrend

If the short-term trend is up, use bullish leveraged ETFs.  If the short-term trend is down, use inverse leveraged ETFs.

Ratio Chart (SPY:$VIX): ST Downtrend

The SPY:$VIX ratio chart is best used to identify market bottoms. Each time the Percentage Price Oscillator (PPO 1,10,0) reading moves below -10 the S&P 500 (SPY) has reached a short-term market bottom.

Volatility Index (13 May 16): $VIX 77.89

The VIX has an inverse relationship to the price of the S&P 500. Thus, we often see the VIX making new highs as the market is making new lows. When the 2-period RSI of the VIX is above 90 we'll be looking to go long.

Leveraged ETFs (13 May 16): JNUG $151.90

Buy (16) shares JNUG @ $151.90
Target Price (10%): $167.10

Leveraged ETFs (13 May 16): NUGT $100.87

Buy (25) shares NUGT @ $100.87
Target Price (10%): $111.00

Leveraged ETFs (13 May 16): YANG $29.59

Buy (85) shares YANG @ $29.59
Target Price (10%): $32.60

Leveraged ETFs (13 May 16): BIS $44.26

Buy (57) shares BIS @ $44.26
Target Price (10%): $48.70

Determine Market Trend (29 Apr 16)

Bull Market, Pullback, Correction and Bear Market

(1)     Pullback: -5% off 52W High   (2) Correction: -10% off 52W High   (3) Bear Market: -20% off 52W High

Benchmark	Symbol	% off 52-Wk High	Market Trend
Dow 30	DIA	-2.11%	Bull Market
S&P 500	SPY	-2.18%	Bull Market
Nasdaq 100	QQQ	-8.11%	Pullback
Russell 2000	IWM	-11.61%	Correction

Although your ultimate goal is to use the stock market to build wealth, you must also avoid losing money.  Knowing how to read the market as a whole will help you to prosper during bull markets and protect assets during bear markets.

Long-Term Trend

The “big dog” of moving averages is the 100-day moving average.  If the index is trading above that level, the long-term trend is considered up; generally, the 100-day moving average is seen as a proxy for the long-term trend.

Benchmark	Symbol	Price	100-DMA	Market Trend
Dow 30	DIA	177.59	169.90	Uptrend
S&P 500	SPY	206.33	198.64	Uptrend
Nasdaq 100	QQQ	105.72	106.34	Downtrend
Russell 2000	IWM	112.48	106.80	Uptrend

In an up-trending market, I will lengthen holding times and give my holdings more room to run.  In a down-trending market, I use short holding times and grab profits quickly. 

  Short-Term Trend

Short-term trends can be captured using short-term moving averages.  The 20-day moving average provides you a simple yet effective way for knowing what side of the market you should be trading. 

Benchmark	Symbol	Price	20-DMA	Market Trend
Dow 30	DIA	177.59	178.29	Downtrend
S&P 500	SPY	206.33	207.34	Downtrend
Nasdaq 100	QQQ	105.72	109.36	Downtrend
Russell 2000	IWM	112.48	111.93	Uptrend

If the short-term trend is up, use bullish leveraged ETFs.  If the short-term trend is down, use inverse leveraged ETFs.