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Should We Buy These 3 ETFs Right Now?.. Timing is Everything
“Timing has always been a key element in my life. I have been blessed to have been in the right place at the right time.” —Buzz Aldrin
Good day members,
Schools in session (yay!), the temperatures are slowly cooling across America and, along with autumn veggies, the stock market is getting ripe for a pickin’. Is it finally time to go long for the big win? Well, we sure are getting mighty close.
So today we’re going to review the three ETF’s that could skyrocket double digits once the S&P 500 breaks above a key resistance point. We’ve already seen enormous returns on the way down with our SPXS, SPXU and SDS plays, and now may be the time to prepare to get into these three ETFs.
As of this writing (Tuesday morning) the S&P 500 has touched and dropped from a key resistance area around 1,990. In our last issue we noted the following:
“What we want to look for is the S&P 500 bouncing around the 1,920 line then running and breaking over 1,990. Once this happens we should definitely consider longing these ETF’s as the index would be set up to make new all-time highs.
Conversely, if the S&P drops below 1,900 there could be an additional selloff to at least the recent lows and the signal of a potential bear market. In this instance, we’d want to forget these ETF’s altogether and revisit the short ETF’s instead.”
In the week since our last issue, the S&P 500 has indeed bounced around the 1,920 level and has begun its ride up to 1,990. If that level is convincingly broken the following ETF’s should offer great upside for the next few weeks.
First, let’s have a look at the S&P 500 chart over the last week, including the opening bell of our last publication.
As the chart shows, our predictions have been quite accurate. The S&P has cooperated with our strategy so far by bouncing around the 1,920 area (never dipping below 1,900), and then beginning its run up towards 1,990. Now although we’ve been right so far, let’s not get ahead of ourselves. We still need further cooperation from the S&P before committing to going long. (Click HERE to read about the 2 things to look for).
Once our trigger has been hit, and the turnaround confirmed, here are the three ETF’s to follow (Remember, we’re still trading in a range that could not only give us a breakout to the upside, but could trigger a bear market if we drop below 1,900. So it’s critical you review the “2 things to look for” in our last issue.
Should things break up, here’s what to watch:
Direxion Daily S&P500 Bull 3X ETF (SPXL)
The investment seeks daily investment results, before fees and expenses, of 300% of the performance of the S&P 500® Index. The fund creates long positions by investing at least 80% of its assets in the securities that comprise the S&P 500® Index and/or financial instruments that provide leveraged and unleveraged exposure to the index. These financial instruments include: futures contracts; options on securities, indices and futures contracts; equity caps, floors and collars; swap agreements; forward contracts; short positions; reverse repurchase agreements; exchange-traded funds; and other financial instruments. It is non-diversified.
Direxion Daily S&P 500 Bull 2X ETF (SPUU)
The investment seeks daily investment results, before fees and expenses, of 200% of the performance of the S&P 500® Index. The fund creates long positions by investing at least 80% of its assets in the securities that comprise the S&P 500® Index and/or financial instruments that provide leveraged and unleveraged exposure to the index. These financial instruments include: futures contracts; options on securities, indices and futures contracts; equity caps, floors and collars; swap agreements; forward contracts; short positions; reverse repurchase agreements; exchange-traded funds; and other financial instruments. It is non-diversified.
ProShares Ultra S&P500 (SSO)
The investment seeks daily investment results that correspond to two times (2x) the daily performance of the S&P 500®. The fund invests in securities and derivatives that ProShare Advisors believes, in combination, should have similar daily return characteristics as two times (2x) the daily return of the index. The index is a measure of large-cap U.S. stock market performance. It is a float-adjusted, market capitalization-weighted index of 500 U.S. operating companies and real estate investment trusts selected through a process. The fund is non-diversified.
So keep your eyes glued to the S&P 500. If that key 1,990 resistance is broken, all three ETF’s could make a great run. We’ve been in the correction zone for several sessions now, which is very healthy but the downside risk of a bear market still remains. There’s a very good chance the index quickly drops back down near that 1,920… that’s precisely why we’ve got a trigger plan in place if either happens. Eyes peeled.
Until next time,
Here’s to good investing…
“You don’t have to swing hard to hit a home run. If you got the timing, it’ll go.” —Yogi Berra
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