SHORT GOLD! BUY INVERSE ETFSGold is extended. period
we are due for a pullback.
either short gold, or BUY reverse ETFS.
Manage risk accordingly!
SHNY trade ideas
Comparing the new SPYU to UPRO and SPXLI am not sure if anyone else noticed, because quite frankly I completely missed it, but there is a new leveraged share on the block that aims to track the S&P 500 ( SP:SPX ). That ticker is $SPYU.
Now this isn’t a conventional leveraged share. Most leveraged shares are between 2 x to 3 x max. However, this one is 4 x. Yeah, you read it correctly, 4 x the S&P. So if the S&P moves 2%, your theoretical gains are 8%.
Now there are inherent risks with leveraged share usage, which I have spoken about before. Now I am not going to get into the risks involved with over-leveraging yourself. I feel like there is enough cautionary tales, both from me and others, about such travesties. But what I want to cover in this post is really just an evaluation of SPYU vs the popular others, such as SPXL and UPRO. For me, my go to has always been UPRO; however, this new one intrigued me so decided to look at it a little more closely.
Overview
SPYU was launched in December of 2023. Surprisingly, despite being an ETF that tracks and American index and is listed on the NYSE, this leveraged ETF is managed by a Canadian institution, the Bank of Montreal. While it is a little strange to see the Bank of Montreal offering such an asset as an American asset, this bank is well known in Canada for offering multiple types of ETFs with exposure to both American and Canadian industries. I myself have many of their products and have been pleased with the returns!
Owning to SPYU’s short-ish existence, its difficult to really make long term predictions about how this will hold up over time. But I have done some comparative analysis on SPYU, UPRO and SPXL, using SPY as a benchmark, to see how SPYU has performed in its short timespan. So let’s get into the results.
Correlation:
Generally, the first thing you want to look at when identifying a leveraged share is the correlation. If a leveraged ETF tracks the underlying well, you are going to see a high correlation. If it struggles to track the underlying well, you will see a correlation with a lot of ‘variance’. Variance just means deviation from what would be, generally, a statistically strong relationship.
So let’s take a look at our 3 amigos in relation to SPY:
In the chart above, we are looking at the correlation of SPYU, UPRO and SPXL in relation to SPY over a rolling 14 period lag (in other words, a 14 day time period).
Purple represents UPRO, green SPXL and Aqua SPYU. In the legend on the right, you can see the max and min correlation of the various leveraged ETFs in relation to SPY. We see that UPRO and SPYU are pretty much on par with each other, with a correlation of roughly 0.97 to 0.98. This would equate to a variance of 0.04 (a perfect correlation has a score of 1, which would be the benchmark to compare the degree of variance or drift from the ability to track the underlying). This is, from a statistical perspective, fantastic! For most instances, we would say this is pretty much on par with a perfect correlation.
The same is technically true for SPXL. SPXL has a min correlation of 0.96, which equates to a variance of around 0.05, only 0.01% more than the other 2 ETFs. Statistically, these tickers are indistinguishable and there really is no statistically significant difference observed between their ability to track the underlying.
What about Slippage and Returns?
Slippage, which can be the result of contango and other factors, refers to a type of “loss in value” so to speak (AKA DECAY!!!). Essentially what it means is, is the ETF delivering what it says to deliver. In SPYU’s case, it says it delivers 4 x that of the S&P (or SPY). No leveraged ETF will ever be able to perfectly match their quoted returned consistently, owning to normal market volatility. However, what we want to see in a good leveraged share is very little slippage. In other words, we want to see a leveraged ETF that more frequently returns what it promises than doesn’t.
To measure this, we can use an indicator I developed a while ago called leveraged share decay tracker ().
Let’s kick it off with SPY vs SPYU:
In this chart, we can see that over a short period of time (under 100 days), the average slippage of SPYU is around 2.4%. For the most part. We can see this quantified in variance (the difference in correlation) and drift (the monetary measure of variance). This means that, at approximately 100 days, the variance in the potential loss or gain is around $1.72. At 30 days, it is $0.25.
This means, theoretically, you could be down $1.72 per share, if you intended to hold for approximately 100 days. Now, this $1.72 could be meaningless if the ETF managed to offer around the quoted returns, and indeed, it seems that it does. At 100 days, the expected return would be 42.65%, based on SPY’s trajectory. The actual return was 31.88%. This is a 10.77% difference. Had you traded SPY directly, you would be up about 21%. So the 10% slippage kind of evens out in that sense, because you are still up more than 10% than the actual underlying itself.
But wait, we need to check how the other leveraged ETFs perform. Let’s look at UPRO and SPY next:
So, remember UPRO promises 3 x the leverage, so the returns will likely be less than the returns on SPYU, which offers 4 x the leverage. Looking at this, we can see the average % slippage is about 0.40%. The average monetary slippage is about 0.40$. And finally, if you held for 100 days, you would only have a slippage of around 3%. So had you invested in SPY in December of 2023 , your returns would have been about 21% and your returns on UPRO would have been about 28%.
And finally, let’s take a look at SPXL:
Remember, SPXL promises to deliver 3x the exposure to the S&P, similar to that of UPRO.
You can see it’s pretty identical to UPRO:
UPRO seems to drift a bit more than SPXL; however, the difference is not statistically significant. The $ amount is also equivalent, taking into account that SPXL is approximately 1.5 x the cost of UPRO.
Cointegration
And finally, the last way to visualize how effective leveraged shares are at tracking the underlying is by creating a co-integration regression. This uses the price of the leveraged share to predict the price of the underlying. A leveraged share with a good relationship will be on point in predicting the price of the underlying. One that struggles will have frequent drifts and deviations from the price of the underlying. Here is all 3 tickers, compared to SPY (SPY represented by the red dotted line):
From here, we can see qualitatively that SPXL tends to have more dramatic swings in both directions, then UPRO or SPYU. However, SPYU and UPRO tend to perform identically.
So what’s the verdict on SPYU and the Leveraged trio as a whole?
My go to for trading SPY has been UPRO. As I just recently learned about SPYU I plan to make the shift here. The results of these analysis show that, from a statistical standpoint, the differences are marginal and not significant.
If you want to nail it down to “which is the MOST significant within the significance” so to speak, the winners here can be grouped by desired outcome. Here they are:
Returns focus:
If its returns you want, its SPYU you should do. SPYU will deliver up and above the returns of UPRO or SPXL, even in light of the drift and slippage. Under 100 days, the slippage shouldn’t be objectively notable. It will only become apparent at the 100 day mark or longer; however, SPYU still manages to deliver returns that surpass both UPRO and SPXL at that time point.
Risk Management:
Risk management has to go to SPXL, for the lack of slippage associated over the longer term. While SPXL does have a little wider variance, it manages to have the lowest slippage in percent and money drift. SPXL frequently delivers on what it promises.
And that’s it folks! Hope you enjoyed!
Safe trades as always!
GDXD 1M Twirl That Cash For Gold SignGold is no haven...not at least as far as I can see.
It is not a buy-and-hold product, and is best designed for short-term tactical trading purposes only. Returns can vary significantly from -3x exposure to its underlying index if held for longer than a day. Are you looking for something to buy hold or you mean trading short term?
The Fund seeks three times leveraged participation in the daily inverse performance of the S-Network MicroSectors Gold Miners Index. The Index is a total return index that tracks the performance of two exchange traded funds, the VanEck Vectors Gold Miners ETF and the VanEck Vectors Junior Gold Miners ETF
Short term play idea: FNGD on the 4H ChartI'm entering a long position in FNGD today at market open using 60% of my equity.
Why:
RSI momentum positive.
RSI about to cross 55. I consider he path between 55 and 70 an ideal long.
FNGD is sitting on 8,13 and 21 period EMAs providing possible support.
Stop Loss:
4%
Will move up manually is it goes in my favor.
Risks:
There's a FVG area aroun $3.78
Price might pullback down there putting me in drawdown.
I've decided not to wait for this pullback as I beleive there is enough momentum in the open.
Additional thoughts:
NQ Futures seem overbought on short timeframes suggesting a swing to the downside in the morning.
Lets see how it goes!
Bullish short GDXD :DLet go! It looks like we are soft landing and the gold and silver bugs are gonna feel it.
FNGU - MicroSectors FANG Index 3x ETN 1/8/2023DPO 62 being used with chart TA above the 0 and below the 0 line. No Options on MaxPain maximum-pain.com Must trade this as cash.
FNGD retrace to $8.50 before target of $10.51, coil/fakeout/pumpFNGD to go back down to $8.50 before target of $10.51 Nxt
I'm expecting a little retracement back to $8.51 with buy limits set from 8.88 down to 8.51
Take Profits at $10.17 and $10.51
Expect to retrace again and coil up. People will be talking about bears taking over, but the Santa rally will cheer bulls up and give them hope... meanwhile we are playing both sides.
Into 2024:
Due to everything going on and how much this market has tripped everyone up and out, I expect a double fakey to occur. FNGD will appear to be pumping (bears winning on FNGU and S&P) then the bulls will appear to take control and the descending triangle on the S&P will appear to have a breakout to the upside only to fail.
People will say its due to a news event, but the Operator/Fed is planning this. Equities will retreat to safety of Bonds. S&P will Fall, and lay off employees, people will beg for the Fed to cut rates and when they do Bonds will explode then Gold then after Equities and Crypto Capitulation we will rebuild on the scorched earth.
BUY BUY BUY WHEN THERE IS BLOOD IN THE STREETS IN MARCH/APRIL 2024!
Quick Flipjust bought hopefully towards the bottom of this over sold move and will be selling between 147-157.69
that should be a quick 20% build off of the 20% made on FNGD
That may be my last trade. Possibly go into FNGD again at the top but may be looking for a VIX play to go off volitivity
GDXU - It's time for a pull backWave i was strong enough to break the resistance line only to fall back to ii. It looks like a false breakout but it's right on plan. Look for a pullback to the 24 range.
FNGU- Technology Titans CounterTrend LONG on ReversalFNGU on the 4H chart is in a trend down within a parallel channel. The previous trend down
from the top of the channel to the bottom was 29% while the counter counter-trend up from
the bottom of channel to the top was 18% over 7 days. Presenly the trend down from the
upper channel is confirmed by the two RS lines near to the 50 level and the Awesome Oscillator
with a down going signal. Trade plan - I will trade FNGU short ( or FNGD long ) until it is at
the bottom of the channel. Upon reaching it and mindful of a fake breakdown. I will watch for
reversal signs on a lower TF and upon finding them in the MACD or Bollinger Bands or VWAP
bands I will close the trade and so long instead.
$FNGU Daily - Cup and Handle 8/22/23: AMEX:FNGU daily shows a recent head and shoulders formation with a price target at around 135ish. Zooming out, we see that a potential cup and handle may be forming with PT at 400 in 2024 if the handle manages to break out.
FNGU- the leaders of the pack will come back first LONGFNGU is triple leveraged ETF of the titans of the NASDAQ; I expect it to come back front
of volatility in the market quickly as its constituents are the leaders here. I hope to exploit this
for 10% before COB for the trading week in the next two days.. A volume profile and mean
anchored VWAP using metrics employed by institutions and those executing with blocks
of voume. Analysis and target levels are on the chart for pureposeful brevity. Trade on !
BULZ - Technology ETF ( AI revolution )LONGBULZ is a 3X leveraged version of the Cathie Wood ETFs. As shows on the
2H chart BULZ broke out of the fair value channel of the anchored VWAP bands
in bullish momentum Not a coincidence. In three months it has gained over 110%
or 35% per month compounded. The MACD indicator shows the lines peaking over
the histogram a cross of them is pending. The mass index indicator shows a signal
into the reversal zone and falling as if about to trigger. This is a VWAP breakout
at its best. It jumped 7 % in one day and now needs a pullback reset.
My trading plan is simple. I will watch for a pullback to the blue line one standard
deviation above the mean VWAP. I expect a bounce off that dynamic support. The trade
will be a long-duration one until the technology sector cools off. Any future pullbacks to
the blue VWAP will have an incremental add to the position. Any pops in price over the second
VWAP line above the mean ( a line not visible here) will be used to signal a sell of a portion
of the position. All in all, this will compound realized profits while underway.
OILU an ETF for OIL - Leveraged and LongOILU is a risky high volatility ETF on oil exploration and production. Where there are risk
and volatility there can also be plentiful profits. On the 4H chart,OILU can be seen breaking
up through long-term anchored VWAP bands in a trend that began in mid-May. Price is
now approaching the mean VWAP lines. The POC line validates those VWAP lines coming in
at nearly an identical price level. On the MACD, negative amplitudes have gradually decreased
in a fashion consistent with bullish divergence. The RSI indicator shows the MTF RSIs to be
in mid-range suitable for taking an entry without evidence of oversold or overbought
parameters. Fundamentally, a variety of factors including
OPEC the re-emergence of the Chinese economy, Russia's war fear of a recession causing a
decrease in demand for oil all have contributed to a mixed picture. The chart is suggesting
a long trade to me and so I will take up the suggestion. I will set a stop loss at the recent
pivot low of $32 while targeting the highest VWAP band at $47. I will raise the stop loss
to break-even when price hits $38 while respecting the ATR and volatility. I see this as
a safe trade with a potential upside of about 33%
$FNGU - Weekly (Going Strong!)This is my all time favorite ETF, AMEX:FNGU with is 3x of some of the ten strongest companies in the U.S. We are in a beautiful upward trend and even though a pull back may be coming (we see 8 consecutive green weeks), I still think AMEX:FNGU is an excellent deal. R at 235 and S at 165.
$FNGU Weekly - Hits Our Price Target (and some) Yeah!Love when we draw charts and candles move beautifully in that direction. We spotted the Cup and Handle Formation in early May and set a price target of 156. I didn't think it would come this soon but glad that it did, with AMEX:FNGU hitting a high of 163 premarket yesterday (Tuesday May 30) before pulling back. Still a strong stock overall but think you can wait to get in at a better deal if you like.
BULZ- a 3X leveraged FANG ETF High Tight Bull FlagBULZ on the one hour chart is showing a high tight bull flag which typically heralds a bullish
continuation. The tight consolidation channel formed today at the POC line of the volume
profile. The zero-lag MACD shows the lines under the histogram and about to cross. The
histogram itself has dropped to a zero amplitude. The trigger for the bullish continuation is
price rises out of the regression channel and above the POC line. BULZ is a triple leveraged
ETF holding the FANG stocks including META, GOOG, AAPL, NVDA and all the others. BULZ
could spend another day consolidated and then run the remainder of the week. The 17% run
thus far could be repeated in the days to come mightful however of the leveraging.
I see this pullback as a great entry into a stock pattern that typically results in a resurgence
of bullish momentum. I have pasted onto the chart a little bit of a description of the
high tight bull flag patterns and their utility in trading when found.
$FNGU - WeeklyPotential Cup and Handle formation in AMEX:FNGU Weekly charts, with price target at 156.
Bottom FishingAt an all time low. Leveraged x3 so can be very volatile. This ETF SHORTS the FANG stocks. Not an ETF to fool around with or stay too long as it consists of some very strong momentum stocks. Top ten holdings below.
Falling Wedge noted. Both lines slope down and converge at the apex.
Falling wedges are usually found at the bottom or after a severe pullback.
They are bullish if the top line is broken with a confirmed upward trend. Some would use 2 closes as confirmation but we are all different and so is each security.
No recommendation.
“The function of economic forecasting is to make astrology look respectable.”
John Kenneth Galbraith
Top 10 Holdings
Meta Platforms Inc Class A
12.53%
Tesla Inc
11.71%
NVIDIA Corp
10.66%
Advanced Micro Devices Inc
10.03%
Netflix Inc
9.65%
Apple Inc
9.39%
Amazon.com Inc
9.35%
Snowflake Inc Ordinary Shares - Class A
9.10%
Microsoft Corp
8.84%
Alphabet Inc Class A
The note seeks to track -3x of the daily performance of the NYSE FANG+ Index, total return. The index comprises of public equity markets of the United States. It takes short positions and uses derivatives to include the stocks of companies operating in the technology and consumer discretionary sectors. The index comprises of growth stocks of companies across diversified market capitalizations. The ETN will mature on January 8, 2038. MicroSectors FANG+ Index -3X Inverse Leveraged ETNs due January 8, 2038 was formed on January 22, 2018 and is domiciled in the United States.
The investment seeks return linked to a three times inverse leveraged participation in the daily performance of the NYSE Fang+™ Index, total return (the “index”). The notes are intended to be daily trading tools for sophisticated investors to manage daily trading risks as part of an overall diversified portfolio. The index is an equal-dollar weighted index designed to represent a segment of the technology and consumer discretionary sectors consisting of highly-traded growth stocks of technology and tech-enabled companies. Benchmark: NYSE FANG+ TR USD
FNGD possible 47.5Possible. Could happen, good opp to take trade.
I will sell after 4 weeks or 8 depending breadth
soxs too
FNGU Retracement for first half of AprilGreat run up so far, looks like there should be a healthy pullback this week. Look out for the $94-95 Level for support. Stop Loss around $93, if FNGU gets below that it could retrace all the way to $80 which is another good buy zone. I'm long on this stock and not looking to invest in its inverse (FNGD) unless FNGU drops below $93
Not financial advice
