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Using the Stock Traders Almanac to Swing Trade LETFs (leveraged ETFs) Results Updated (slide 26) on Feb 2 for presentations at: Free Market Traders- Jan 24, 2011 Tuesday Webinar- Jan 25, 2011 OC Traders- Jan 29, 2011 Wally Eater (Thank You to Rick Edwards & Brian Cox for scanning Stock Traders Almanac pages) Slide 2 DISCLAIMERS Not a professional trader Presentation is for information only Not selling or soliciting anything Viewers hold presenter harmless ALL leveraged ETF sites state VERY clearly they are for day trading ONLY -- NOT for holding for extended periods Not an offering per SEC Acts of 1933-34 Slide 3 WHAT ILL COVER What is the STOCK TRADERS ALMANAC? How I used the Almanac to identify a swing trade for leveraged ETFs (LETFs) 11/8&9 - 2/2/11 RESULTS from swing trading LETFs What I learned-- & would do differently POSSIBLE NEXT TRADES using the Almanac? Q&A- HOLD questions until end, in BIG type so you can see at back Slide 4 WHAT IS THE STOCK TRADERS ALMANAC? Stock Traders Almanac 2011, Hirsch & Hirsch, Wiley Publishing. companion Commodity Traders Almanac 2011 Hirsch & Person (Persons Pivots). The Almanac is a practical investment tool that alerts you to patterns and tendencies on which shrewd professionals enhance profit potential. 20 yrs data back tested:Dow, S&P, Nasdaq, RUT Amazon ($25.31) or StockTradersAlmanac.com. Slide 5 HOW I USED THE ALMANAC Updates investment knowledge & informs you of new techniques and tools Is a monthly reminder and refresher course Alerts you to seasonal opportunities / dangers Supplies forms for portfolio planning, record keeping and tax preparation Slide 6 2011 ALMANAC EXAMPLE PAGES on next slides (title only, no format discussion) Slide 7 Page 7- Calendar Slide 8 Page 18- Jan may forecast the year Slide 9 Page 22- performance during mo Slide 10 Page 32- 3rd yr of election cycle up Slide 11 Page 40- if Dow 1Q close 13 HYPOTHESES p 4/4 Market up 11/8-9/10 thru 2/2/11 due to (green = occurred, black= pending, red = did not occur): 4Q10 earnings > estimates Oil will be >$90/barrel USD further declines (EU problems tended to negate USD decline) Slide 22 HYPHOTHESES ID ADD p 1/2 Use leveraged ETFs that ALL have a HIGH correlation w/each other. AGQ had a very low correlation w/DRN, ERX & TNA. (source for correlations: www.ETFscreen.com) www.ETFscreen.com Bump from BHO State of the Union Major currencies: Yen, EU; possibly CAD, AUD Slide 23 HYPHOTHESES ID ADD p 2/2 Ireland, Greece &/or Italy do not substantially worsen 94% of S&P profits for 2010 were on the first day of the month- thanx to Eric Severance- posted to OC TRADERS in Jan (http://www.greenfaucet.com )http://www.greenfaucet.com Weather anomalies affecting: mining, crops, oil, etc (Australian floods were an outlier) Slide 24 SWING TRADE OBJECTIVES 11/8-9/10 thru 2/2/11 12.3% profit for LETF portfolio (50% APR) Capture overnight gaps Hold thru late Jan or 2/2- w/o taking trading profits/losses Sell if extraordinary event Do not exceed amount allocated for trading Run model by Free Market Traders for input prior to buying Slide 25 WHAT LETFs I BOUGHT (approximate equal dollar amount in each) DRN (3x real estate REITS), 11/8, $61.16 ERX (3x energy), 11/9, $46.25 AGQ (2x silver), 11/9, $142.84 TNA (3x RUT 2000), 11/9, $59.95 Slide 26 RESULTS ($/share, % APR based on 252 trading days / yr, green color / not sold- held yet as of 2/2/11 close, approximate equal amounts invested in each ETF below) BUY DATE SELL DATE (trading days) BUY $ / share SELL $ / Share PROFIT $ / share PROFIT % APR % As of 2/2 DRN11/8/102/2/11 61 days 61.16 62.35 1.19 1.9% 8% ERX11/9/102/2/11 60 days 46.25 74.8628.6161.8% 260% AGQ*11/9/102/2/11 60*days 142.84 127.99 2/2*price - 14.85-10.4% -44% TNA 11/9/102/1/11 59 days 59.95 77.6617.7129.5% 124% * $127.99 was 2/2 close. AGQ was held to be sold later. Slide 27 WHAT ID DO DIFFERENTLY & WHAT I LEARNED p 1/2 BUY using my day trading technicals. All 4 leveraged ETFS would have been a better BUY a week later had I used my technicals for entry. SELL when objectives are met-- or track daily for ongoing profits SELL if quick run up, BUY back at drop using day trading technicals, ie Jan 3 would have been a SELL & Jan 4-7 a BUY BACK. Slide 28 WHAT ID DO DIFFERENTLY & WHAT I LEARNED p 2/2 BUY TYH, 3x tech, week before Thanksgiving (ie, the old buy Comdex & sell May buy model) thru at least 2/2. DAY / SWING TRADE during 11/8/10 - 2/2/11. Estimated returns would have been 2-3x greater day / swing trading rather than buying / holding. Slide 29 POSSIBLE NEXT LETF TRADES BASED ON THE ALMANAC p 1/2 Do not hold an LETF for more than 1, or 2-4 days max and ALWAYS trade w/the trend. For the S&P: there are only a several to back 4 bull or 4 bear days* in a row: Feb 10-22 (4 & 4 days), Apr 1-6 (4), July 7-14 (5 of 6 days), Nov 23-Dec 5 (6 of 9 days, no bear days during the 9 days). There are no 4 back to back bear days or 4 out of 5/6 bear days for the rest of 2011. * one day is when the S&P is up/down t least 60% of the time on that trading day for the last 20 yrs. Slide 30 Slide 31 POSSIBLE NEXT LETF TRADES BASED ON THE ALMANAC p 2/2 FAS, buy early Jan & trade thru early Jun DRN, buy Jan & trade thru early Jul ERX, /UCO (2x oil), buy early Jan & trade thru early Jul TYH, 3x tech, buy early Jan & hold thru May 3 Weather (rain, freeze, tornado, hurricanes, El Nino, etc) Slide 32 CONCLUSIONS / QUESTIONS p 1/2 Almanac provided edge for swing LETF trades Almanac also provided an edge for 10 profitable 0-3 day LETF swing trades. Held most longer than normal (1-3 days if trend) to capture daily gaps. Have 1 LETF position, AGQ: BUY- Thurs & intend to SELL by Tues. Slide 33 CONCLUSIONS / QUESTIONS p 2/2 Closely monitor other items that could undermine trade: political events, economic news (US / EU / China), industry news, etc This presentation will be at xsprofits.com and be replaced with updated results page when DRN, ERX, AGQ and TNA are sold.