Dilute Market Risk with ProShares UltraShort QQQ (ETF) (NYSEARCA:QID) and ProShares Ultra QQQ (ETF) (NYSEARCA:QLD)
Stop worrying, and Treat Every Day Like a Tuesday...
To the naked eye this market appears to be a no-brainer. Investors all seem to have a similar sentiment, and that is to buy, buy more, and if it dips buy even more, because it will keep increasing.
Although they have all rode the coat tails of Trump, someone everyone loves to hate, and they have largely priced in tax cuts, the idea that he will announce cuts soon has fueled even another round of buying. Again, they are expecting a rally, but is this priced in?
Goldman Sachs seemed to think recently that the Trump Benefits were priced in, and the 26x multiple on the S&P 500 would support the notion that good news is absolutely priced in already too, and that means risks are high, but investors do not care about that right now.
They won't care until it matters, and when they start to care the little guys are likely to get hit square in the face, but that is where the option I have laid out below comes into play.
Instead of being at the mercy of the market, why not trade it, and end every day in cash?
I have created an intelligent automated and correlated market timing and stock selection tool, Trend Tracker, which trades ProShares UltraShort QQQ (ETF) (NYSEARCA:QID) and ProShares Ultra QQQ (ETF) (NYSEARCA:QLD) according to a strict set of rules that have been proven over time. The two strategies we suggest for use with this tool have returned 19% and 29% respectively over the past 12 months (paper trading mode utilized), and Trend Tracker does all of the work.
Trend Tracker uses support and resistance levels from the NDX to trigger trades in QID and QLD. There are integrated risk controls in line with active trading disciplines, but the automated nature of Trend Tracker removes the burden of making the trades.
Importantly, every day ends in cash, and that means when the market does start to care again, and we know it will (just a matter of time) it won't really matter. While everyone else is scrambling to figure it out, anyone using Trend Tracker will simply continue to do the same thing. The rules are the same every day, the discipline won't change if sentiment changes, and the strategies can work in both up and down markets, and historical performance proves it.
Eventfully the market is going to care again, valuation will matter too, and corrections will come, but instead of trying to guess when that will be the better approach is to just adopt a strategy that can work no matter what. Doing that certainly removes emotions, having no overnight risk does too, but even more, when we do the same thing every day without concerning ourselves with all of the surrounding noise we are free to be much more objective.
- If you really don't want to care about the market's risks, give Trend Tracker a Try.
- I think it is a great way to distill the risks in the market.
- And an approach that can work no matter what.