Skip to content

2024 Trading Strategy 01212024

Hello, everyone. It’s Stephen Whiteside here from, and I hope everyone had a wonderful weekend. In this presentation, I thought we’d spend some time talking about a Trading Strategy for 2024. Now, at the start of the year, everybody wants to know everybody’s predictions, and I really don’t want to make any because I really don’t know which way the market is going to go. I can give you a very strong bullish case. I can also give you a very strong bearish case. At the end of the day, we’re here to follow the money. If we can follow the money in both directions, then it’s a lot easier to make money at the end of the year. We can do that by using Leveraged ETFs. We really don’t care if the Bulls or the Bears win Over the short term. Of course, over the long term, the Bulls always win because the market is designed to go up over the long term. But in the short term, the market can go down. It can go down sharply. And if it wants to go down, we can make money as it falls and not have to worry about which way the market is actually going.

Having a strategy based on the market always going up, works over the long term, but it certainly can be dangerous over the short term. Now, the leveraged ETFs come in pairs. You have a bullish one and a corresponding bearish one. We can be basically market neutral, not caring whether the market goes up or goes down. If the market is going up, we can be long the bull ETF. If the market is going down, we can be long the bear ETF. We can also be diversified. We can pick multiple indexes to follow. We can also look at different sectors of the market that we can either be long or short in. It’s up to you which ones you want to be involved in. We are first going to start off looking at the US market and some US examples, and then we’re going to move on to the Canadian market and some Canadian examples. Starting off in the US, looking at the S&P 500 Index. On Friday, it was up 1.23%. Now, the corresponding ETF, which is the SPY, which is a 1X ETF. It’s not a multiple of the S&P 500, it is an S&P 500 equivalent.

It was up a couple of ticks more than the index itself, so 1.25%. Now, leveraged ETFs come in multiples of that, so either a 2X, 3X, or a brand new, the 4X ETFs. In Canada, we have 2X ETFs available to us. In the US, the most popular are the 3X, and 4X ETFs just came out recently, and not many people are using them so far. Now, I always recommend that you have a basket of these ETFs. Typically, you’re looking at five areas of the market and with a bull and a bear ETF. So there’s two ETFs for each of your choices. And we’ll take a look at some of those in a minute. But these are trading tools. They’re not investing tools. And so they are not equivalents. If you want to be a long term investor in the S&P 500, the SPY would be the best solution. Using the leveraged ETFs, they can lose money over time depending on how many times the market changes direction. We’re specifically talking about a short term trading strategy here. We’re not talking about an investing strategy. Looking at the 3X Bull ETF for the S&P 500, if the S&P 500 was up 1.23%, a 3X Bull should be up 3.69% on Friday.

Well, in fact, the 3X Bull ETF was up 3.62%, so just a few ticks below what our target price would have been, but that’s pretty close. The flip side of that is that the 3X Bear ETF was down 3.72% on the day. So again, we’ve got the opportunity to be either long a Bull or long a bear ETF for each one of these markets. Now, the rules are the same and they’re pretty simple. A Buy signal is the first close above the upper channel line, and a Sell signal is the first close below the lower channel line. Of course, we’re going to have profit targets for every symbol, and we’re going to try to take money off the table as a market moves in our direction. But coming in on Monday, if we were to close below $101.34, that would give us a Sell signal, and we come in on Tuesday morning and liquidate the remainder of our position. Now, we do have 15 charts in the database for every symbol. We’ve got seven daily, seven weekly, and one monthly chart. In this trading strategy, we’re only using two charts, and that’s the Daily Right Side Chart and the Daily Price Targets Chart.

And in this particular example for the 3X ETF, we’re looking to Sell When we get up to 112.50. I would put an order in just below that level. Now, as you can see, as the market is hitting all time highs, it’s also up at the top of our projected trading range. There’s no guarantee we’re going to stop at 112.50. So if you just do the math, it’s easy enough to look at the difference between the lines as you see them on the screen right now and just add another segment above, and that takes us up to 118.75. Now, my strategy strategy has always been to Sell half a position at the first price target and then Sell half of the remainder position at the next price target. Coming into Monday’s trading action, you can see for the triples for the Nasdaq 100, we’re nowhere near the lower channel line, so not concerned about seeing a Sell signal on Monday. For the triple Q’s, once again, we’re up at the top of the projected trading range up there at 56.25. If we start trading above that level, and the next mathematical target right now is 59.38, once we start trading above the top of the projected trading range for a couple of days, we will recalculate a new playing field with higher projections.

But right now, we are just coming up to the top of the projected trading range. Now, all of these ETFs that I’m showing are very liquid. For this particular example, the triple Q’s for the Nasdaq 100 traded over 92 million shares on Friday. Now, when we look into the different sectors, it’s up to you what you’re interested in. I’m mostly interested in resource stocks. Some people are interested in biotechs or financials, etc. And so right now, the bear ETF for the energy sector is currently on a Buy signal, making a new high for this move on Thursday, coming back a little on Friday. We hit our next price target of 31.25 on Thursday. So congratulations. You got to lock in some profits. Our next profit target is 32.81. Then looking at the bear ETF for the gold sector. For DUST, Dust. We are hitting a new high on Friday. Our next price target is 13.28. As you can see, we’ve been short the gold miners since the start of the year. Now, another area of the market you might find interesting is the small caps, and we’ve been bearish on the small caps all through the start of 2024.

Now, we dipped into the channel on Friday, so there’s a mathematical possibility of a Sell signal for the bear ETF on with a close below 21.93. We were trying to get to $25. That was our next profit target. So far, we have not been able to do that. So this trade could end without taking any profits. Looking at the bull ETF for the small caps, and again, this is fairly liquid. Over 29 million shares traded on Friday. On Monday, we’re looking for a close above 35.70 to give us a new daily Buy signal. Now, this is all emotional free trading. I’m going into Monday not caring at all which way the market goes this week. If it’s going to go up, that’s great. If it’s going to go down, it doesn’t really matter. I’m going to be able to have the opportunity to make money no matter which way the market goes. Next up, let’s take a look at the Canadian 2X ETFs. If you’re not a Canadian investor, if you’re not involved in Canadian market, I would suggest you just watch to the end of the video because you may learn a couple of more things here that I have not mentioned already.

The Canadian market is a little different than US market right now. We are currently short the Canadian market or long the bear ETF. And so coming into Monday’s trading action, the bear ETF actually dipped into the channel on Friday. And so on Monday, we’re looking for a close below $6.40 to kick us out of the bear ETF. Now, you’d think that we’d automatically go into the bull ETF if that were to happen, but transitions don’t always happen on the same day. So it is possible that we get a Sell signal in the bear, but not get a Buy signal in the bull on the same day. And sometimes those transitions don’t happen at all. We could get a Sell signal in the bear on Monday, have the market pull back on Tuesday, and still not get a Buy signal in the bull. And in fact, if the market would continue to move lower on Tuesday and Wednesday, we might actually have to go back into the bear ETF and not spend any time at all in the bull ETF. So speaking of the bull ETF, we’re looking for a close on Monday above $20.15. Now, the bull ETF was up 1.42% on Friday, so that should be twice as much as the unhedged ETF, and that was up 0.76%. So the XIU, which is the most actively traded and actively followed ETF in Canada, was up 0.76 %.

So a little less than what the 2X ETF was, but pretty close. And so you’re almost getting twice the bang for your buck using the 2X ETF. Now, in Canada, the selection is not as big as it is in the US. Now, for Canadian investors looking for Canadian-only options, I would suggest these five pairs. Now, there are other pairs available. In fact, natural gas is one of the most popular, but it is extremely volatile. And if you want to play with this one, well, you need to be a very seasoned a trader to do so. Looking at the bear ETF for natural gas on Friday, it was actually down nearly 14% on the day, and that’s not unusual for this particular ETF. So that’s extreme volatility. At the other end, you’ve got very thinly traded ETFs such as the financials. Now, financials by themselves are not the most volatile sector of the market to begin with. This area of the market doesn’t attract a lot of traders. In fact, for this particular ETF, the bull ETF for the financial sector, it was less than 10,000 shares traded on Friday. Just be aware of that. I’m looking at the major pairs.

For the TSX, for the S&P 500, if we look at this chart, you can see we dipped down and spent all day trading below the lower channel line. But if we go back to Wednesday’s chart, you can see we were looking for a close below $17.89. We actually closed at $17.90, so right one penny above the channel line. So that did not generate a Sell signal. Our first profit target for the S&P 500 2X ETF is 18.75, then 19.53. Looking at the Nasdaq 100, again, making new highs here. And in this case, we’re trading above our projected trading range. And of course, over the next couple of days, if we stay up here, we’re going to calculate a new playing field. But right now, if you just do the math, the next price target is 1797. And as a backup, you can always go to the weekly chart. I said we only use two charts, but sometimes you might want to go to the weekly chart and see that the next major price target is 18.75. Now, looking at the energy sector, we are long the bear ETF at the moment, looking for a move up to 6.25.

For gold stocks, again, we are long the bear ETF. Our next profit target is 6.64. We’ve already hit a couple of profit targets during the month of January and looking to continue to move higher. Is this a realistic target? Well, yeah, we were up at that level back in November, so it is certainly a realistic target to the upside. Okay, let me wrap up this presentation by giving you one more very interesting tidbit, and that is the fact that you can do this trading strategy in a retirement account. It’s not normal for you to be able to short a stock or short the market in a retirement a retirement account, but you can go long a bear ETF in a retirement account. That means you can make money when the market is falling and everybody else is crying about the fact their retirement investments are going down. Again, this is a trading strategy, not an investing strategy. You should be diversified. It’s fun to start out with just one ETF, but you probably want to start off with several pairs. I recommend five, some indexes, sectors. As I mentioned, I have an interest in the resource sector.

Some people have a strong interest in biotech’s and semiconductors and other areas of the market that we didn’t talk about here, and that is certainly doable. There’s lots of opportunities, especially in the US market, to be diversified. Okay, thank you very much for your time and attention. Next time, you’ll hear my voice is on Tuesday morning. And of course, if you have any questions at all, please drop me an email, and I’ll be glad to reply as quickly as possible.

0:00 – Introduction to Leveraged ETFs

0:39 – Understanding Leveraged ETFs

1:54 – S&P 500 Leveraged ETFs Explained

5:38 – Nasdaq 100 Leveraged Trading

6:27 – Energy Sector Leveraged ETFs

6:57 – Gold Leveraged ETFs Overview

7:15 – Small Caps Leveraged ETF Strategy

8:12 – Canadian Market Leveraged ETFs

12:44 – Leveraged ETFs for Retirement Accounts

13:16 – Diversification with Leveraged ETFs

13:48 – Concluding Leveraged ETF Strategies

Stephen Whiteside

Sunday, January 21, 2024

Print Friendly, PDF & Email