Skip to content

Leveraged ETF Trends

Good morning, everyone, and welcome to Wednesday morning. It’s Stephen Whiteside here from In the premarket this morning, things are fairly quiet. We are waiting for some economic numbers to come out at 8:30 this morning that could add to the premarket volatility. It is the day before Thanksgiving, which is historically a positive day for the markets. Yesterday, the VIX continued to move lower. We’re going to remain short term bullish on the market as long as the VIX does not close above $15.04 on Wednesday. And of course, that upper channel line is continuing to move lower daily. Now, Tuesday turned out to be an inside day for the S&P 500 and for the Nasdaq and for NVIDIA . NVIDIA reported earnings last night. We saw it trading down last night. It is trading up in the premarket this morning. We’re still stuck to $500. If we can start to break away from $500, 531.25 is our next target to the upside. In the premarket this morning, we’re trading up for $5 $6 ahead of those economic numbers. Now, while the US major indices had an inside day on Tuesday, the Canadian market actually was negative from the get-go and traded right down to the upper channel line.

So for the iShares for the TSX 60, we’re looking for a close below $30.32 on Wednesday to give us a sell signal. Now, it was an odd day yesterday. Only one sector was up, and that was materials. The gold stocks traded higher yesterday, both gold and silver stocks. At the bottom was all the safety trades, consumer discretionary, health care, consumer staples, utilities. Those are basically the safety sectors. They led the market lower yesterday. There’s Barrick leading the TSX 60 higher, while George Weston led the TSX 60 lower down over 5% on the day. You don’t see that very often. Moving on, let’s take a look at the leveraged ETFs. And of course, in Canada, they are 2X ETFs. In the US, there’s 2X ETFs as well, but there’s also 3 X ETFs, and we like to use those. So the Horizons BetaPro Bull ETF for the TSX 60 had a pullback yesterday, so no change in trend. We hit 18.75, so cha-ching, you got to lock in some profits. Next target to the upside is 19.53, and you’ll see that we traded just below that level back in the summer and into September. I wouldn’t be putting an order in it in 19.53.

I’d be going back and looking at that high and then putting an order in just below that level. Now looking at the 2X ETF for the S&P 500, and of course, we’re looking at Bull ETFs right now. Inside day yesterday, we’ve had several opportunities to take money off the table. You just have a partial position left and you’re waiting to get kicked out. On Wednesday, of course, a close below 15.84 would give us a sell signal, certainly not expecting that to happen. Similar situation for the Nasdaq-100 inside day yesterday, we’ve had several opportunities to take off the table looking to lock in some more profits at 15.63. Now looking at the Energy sector, we’re looking at the Bear ETF for the Energy sector right now. That ETF has been capped by the 100-day moving average and the top of the Fly Paper channel. We need to break out above those highs if this ETF is going to continue to move higher. When you’re looking at anything commodity related, of course, the volatility goes up. For this Energy ETF, the current average to range is 4.07 %. Compare that to the Nasdaq 100 ETF, which is down at 2.3 %.

When you get away from those major indices and into the commodity ETFs, the volatility goes up. Speaking of volatility, the Gold Bull ETF is currently on a buy signal. We’re coming up to the 13.28 level, which has been a major area of resistance over the past few months. Of course, if we can start to take that out, then 14.06 and 14.84 do come into play. Okay, so those are some of the top Canadian leveraged ETFs. Now we’re going to move on to the US market. Again, I’m just going to be covering some of the top ones. Just a reminder, the main reason I like following these is the fact that we can play both sides of the market in our retirement accounts. There’s certainly all kinds of options to make money when the market is falling in a regular trading account, but you are limited in your retirement accounts. And so that’s why I love following these because when the market’s going down, you can make money. Now we’re starting off looking at the Bull ETF for the S&P 500. And again, these are going to be 3X ETFs. And again, it was an inside day yesterday.

We’re trying to get to 93.75. Now is that a legitimate target? It certainly is. We hit that back in August. So we’re expecting to be able to go up to that level as well and take in some more profits. Looking at the Nasdaq-100, again, it was an inside day yesterday. We hit 43.75 this week. Next target to the upside is 46.88. If you look back in July, we hit that level. So that is a legitimate target. Again, because these are 3 X ETFs, the volatility is going to be higher compared to the 2 X ETFs in Canada. Right now, the average to range for the 3 X Bull ETF for the Nasdaq 100 is 3.46 %. Now, Semiconductors are going to have even more volatility, and we’re trying to get to $25. Is that a legitimate target? Not really. We fated that just back in August, so I wouldn’t be putting an order in at $25. I would be putting an order in just below that level. We’re back at the highs from August. If we can take that out, and that hasn’t been done since back in July, then 2013 would certainly become a legitimate target.

Of course, Semiconductors have more volatility than the rest of the market. The average true range for the semiconductor 3X ETF is currently 5.81%. You’re getting up there past what we would normally consider the volatility for a commodity sector. Now, there is a FANG ETF. There’s a 3X FANG ETF. It’s going to move fairly similar to the Nasdaq 100. We had an insight day yesterday. We hit $200. So congratulations, you got to lock in some profits. Is 225 a legitimate target? Well, if you look back to the left, you can see we hit that in July. So with NVIDIA trading higher today, we may be headed towards the 225 level. And let’s finish off looking at the 3X Bull for financials. Typically, these aren’t that popular, but in 2023, with what’s been going on with the regional banking sector, there’s been a lot more interest and a lot more volatility in the financial sector. So here we are along the bull. We’re trying to hit $68.75. Is that a legitimate target? Certainly is. We hit that in September. Of course, if we break out above 68.75, you can look 2 lines up all the way up to $75.

That would be our new playing field. Now looking at the Fly Paper Channel chart. Again, we’re using this to keep track of our average true range. Right now, it is 2.95. Typically, the financial sector has lower volatility than certainly the technology sector and the commodity sector. Typically, it’s at the lower end of the overall scale, so a lot less volatility in financials. Okay, folks, that is all for this morning’s presentation. Looking for a fairly quiet day this morning. Us markets will be closed Thursday and half of Friday. Canadian markets will be open Thursday and Friday. We don’t cover them when the US markets close. There’s really no reason to do much in the Canadian market without the guidance of the stock index futures and commodity futures. So we will be closed Thursday and Friday. The next time we’ll be posting charts is Saturday afternoon. We’ll certainly be posting them Wednesday night, but after that, the next update will be Saturday afternoon. So enjoy the rest of your day. Enjoy your Thanksgiving holiday. And the next time you’ll hear my voice is next Monday.

[00:00:00]: Pre-market analysis and market sentiment
[00:01:13]: Canadian market performance and sector analysis
[00:02:26]: Leveraged ETFs and trading strategies
[00:03:39]: Volatility in energy and commodity ETFs
[00:04:45]: Bull ETFs for the S&P and Nasdaq
[00:05:57]: Volatility in Semiconductor ETFs
[00:07:10]: Financial sector ETF analysis and trading targets

Stephen Whiteside
Wednesday, November 22, 2023

Print Friendly, PDF & Email