Big Down Days Mean Big Profits
Every trading morning before the markets open, I write a market forecast commentary to tell people where markets are going and how to profit from it. By using a powerful form of cyclical analysis based on price, market breadth, volume, and sentiment, we can mathematically derive a very accurate prediction of the market’s path. It’s similar to the formulas used to predict hurricane development and tracking.
Since 1980, when I first began trading and using the earliest forms of this analysis, I’ve seen a lot market up and downs, and the 500 point drop we saw yesterday (September 16, 2008), was nothing exceptional. It was simply another expected wave in the ongoing undulations of market motion. Sure, politicians are trying to use the current bear market trend in this political season for some advantage, but just know, they can’t do anything to change the market’s cyclical patterns - except perhaps to make everyone feel worse about it. Also know, markets will recover as this bearish cycle concludes, and we will again have up moves that can become just as dramatic as some of the down moves we’ve seen of late.
The good news is, that instead of fearing or hand wringing all these bearish down days and weeks, you can be profiting from them. How? By using any one of a series of profitably performing INVERSE Exchange Traded Funds (ETF’s). Inverse funds rise while markets decline! My favorites these days are the QID, DXD and SDS. In the 500 point decline day we had on the Dow Industrials, the DXD was up than 8.6 % for the day and the SDS was up amost 10%.
Even better, from the time I began telling everyone to play the bear side of the market beginning in mid-August 2008, and said the downside would last for 4-6 weeks, the Dow has declined from a value of 11,659 to 10,919 (mid-day September 16,2008), or some 740 points (7%). The Dow’s inverse ETF the DXD however, which rises twice as fast as the index declines - has risen from 60.40 to 68.10 over the past 5 weeks, or 12.7% ! The QID is up over 20% in the same time!
So for your own investing sanity and portfolio peace of mind, don’t hang on to losing positions waiting for bottoms that always come at much deeper levels than your advisor promised. Hedge your portfolio using these incredible inverse performing alternatives, and better yet, be completely out of losing stocks and funds and replace them with these inverse ETF’s plays altogether. They trade just like any other stocks where you can buy or sell anytime during the trading day and even use stop losses.
Your financial future will always be much brighter by knowing where and when markets are going to turn, and when its time to trade the bear, employ this strategy and you will be looking at big down days a whole lot more profitably!
Stephen Swanson is the author and publisher of the website: www.TheMarketForecast.com. Each morning Steve illustrates where markets are going, and writes an amazingly accurate commentary on how to trade them right now.