Gold ETF and equivalency tracking.

One of the factors that affects how appropriate an ETF is to replace an underlying index is how well it tracks relative to the underlying index moves. Right now I am in a gold trade that I am using IAU as a proxy for gold futures contracts.

I have both the futures and the ETF prices tracking from my entry point as if I had bought both. So far my real position in IAU is beating the futures by a slim margin.

For example, last night's close for gold was 1362.7 and IAU was at $13.32. Now futures trade after hours so there is no continuous price changes to compare so EOD is as of 1600h yesterday. The increase from the position opening is 0.87% for gold (11.7 points) and 0.98% for IAU (13 cents per share).

While this is worth noting the real difference is mostly negligible as futures contracts can vary based on factors other than just the traded price for gold. If the contracts are skewed high due to demand or expectations then later on the futures increase in value may be less than the corresponding ETF as this initial disparity shrinks.

Basically, if the tracking is this close I consider it acceptable to base the gold trades off of the futures contracts for triggers at entry and exit. The only exception might be that virtually closing the futures trade due to proximity to the expiration date may not apply to the ETF trade. It depends on the trend.

Jeff.

Trading the VIX

I entered an ETF position yesterday, sort of on a whim but with some idea of what I was getting into.

VXX is the ipath mid term volatility index ETF. It is a 1:1 rather than a leveraged ETF so tracking should be mostly linear...even though the price is higher than the VIX value. I figured that it is very low now...even though it could go as low as 15 it closed out at 20.1 yesterday. VXX closed out at about $26.80.

Actually, upon closer inspection the relationship is not necessarily linear as it tracks lower at some key points wehre it should not be quite so low. I suppose, like a leveraged ETF it has some medium term tracking problems due to inherent costs and percentage move tracking.

I set a limit order for $27.50 and was obviously filled at that price as it came down. My stop is set at $25 as the lowest it has been was $26.42 when the VIX hit the mid 19's. My current target would be $34 as that is the resistance level so far. If that is broken the next is $41.

This could be a position to hold for the next drop in the market as the correlation is close enough for my shorter timeframes.

The thing about the VIX is that as it approaches zero it tends to slow down as zero is not a value that it could reach, in practise. The lowest it has ever been, since 1992, is 9.31 late in 1993 and under 10 a few times between 2005 and 2007.

Historically it tends to follow trending models and the 200DMA is a nice one for the medium term. The exception was the meltdown in late 2008...which threw most historical models out the window for any style of trend trading.

I am, according to the chart, positioned for a counter trend breakout. Due to the nature of the VIX that is a relatively safe bet at these fairly low numbers.

Jeff.

ETF and the Sector Rotation Spread Plan

I was toying around with the idea of trading spreads based on the sectors and just using ETF options. I checked a couple of them and find that the option chain is not very robust or they are strikes at $5 increments. So I will put my sector rotation plan on hold until I take the time to find some sector representative securities that have good option chains to trade.

I could just buy long ETF options depending upon where the sectors are in relation to the S&P in terms of trending but I am finding that I am liking both the idea and the execution of the spreads as I am starting out.

I did buy another book the other day, "The Bible of Option Strategies". It outlines the 60 or so main methods of setting up options in conjunction with stocks, in place of stocks combined and singularly. Not too in depth in the practical application but all the pertinent details that go into determining which ones to use. It is up to me to determine when and exactly how, but that is what I like to do best.

Jeff.

Williams %R application to ETFs

I considered running this on a few stocks to see what would happen but decided to try it out on some ETFs first. I feel that the ETF better reflect the sector and are less prone to gaps and SEVERE adverse moves based on news or a single company's "issues".

So here is a chart of XBI - SPDR S&P Biotech Index for the past year.

The %R indicators are the 6 and 18 day period. The chart is setup for 1600 X 660 which was good for me to work with and shows up nice when expanded.

Here is a rough table of the trades as noted on the chart.


DATE IN Price DATE OUT Price Profit Target
2008-10-28 $47.30 L 2008-11-04 $55.90 $8.60 $3.00
2008-11-04 $55.90 S 2008-11-21 $46.15 $9.75 $3.00
2008-11-21 $46.15 L 2008-12-17 $52.60 $6.45 $3.00
2008-12-17 $52.60 S 2009-01-15 $51.00 $1.60 $1.60
2009-01-15 $51.00 L 2009-02-04 $54.90 $3.90 $3.00
2009-02-04 $54.90 S 2009-02-20 $51.40 $3.50 $3.00
2009-02-20 $51.40 L 2009-02-27 $48.00 -$3.40 -$3.40
2009-03-27 $50.00 S 2009-04-08 $45.20 $4.80 $3.00
2009-04-08 $45.20 L 2009-05-11 $46.55 $1.35 $1.35
2009-05-11 $46.55 S 2009-05-26 $45.00 $1.55 $1.55
2009-05-26 $45.00 L 2009-06-03 $48.00 $3.00 $3.00
2009-06-03 $48.00 S 2009-07-08 $48.00 $0.00 $0.00
2009-07-08 $48.00 L 2009-08-04 $54.00 $6.00 $3.00
2009-08-19 $51.80 L 2009-08-28 $55.00 $3.20 $3.00

Total per share profit was $50.30 taking the full move and without placing any stops other than to secure some profits on the last few positions. All trades were placed based on the %R indicators and the trades were mostly exited, and just reversed, also based on the indicator. also all trades were executed on the next morning's opening price for sake of simplicity. Using a real time chart to time entries and exits could easily be done in order to secure a better fill price, but this just shows that is not really necessary.

The last column is based on closing every trade based on a $3 per share profit target and still gains $28.10 per share. With the reversal trades this would be silly to do as it gives away lots of profits.

I need to investigate the use of options for these same instruments now as a means of eliminating the need to be concerned with stops and enabling me to hold the short and long (puts and calls) positions while transitioning between reversal trades.

Jeff.

March 16th, Return to the basics

Today I played with a return to stocks as opposed to ETFs, at least not ETFs exclusively. I have determined that ETFs are too restricting in the method that needs to be used to trade them intraday. The volume means little to nothing most times as traders scramble to place their best idea on the table while I attempt to take potshots at their offers and bids. The trouble arises in my information is not of the best quality or of the best speed so I am behind the ball when it comes to trying to really call the next move and make the trade.

Stocks, on the other hand, reveal more in their quote stream than does the chart, often. So combining a streaming quote and chart for a stock that is familiar, liquid and moving well enough gives almost all the information that one needs to make good on the fly decisions about placing trades based on ideas formed from the information at hand.

Yamana Resources Inc., YRI.TO.

This stock is one of the stocks held in the Global Gold Index so it is at least as familiar as gold is to me in general, it tracks reasonably well with GD, not as nice as Agnico-Eagle Mines (AEM) but at over $50 AEM is slightly out of reach if I plan on using stops for my trading in my TFSA.

In addition to trying a stock back on for size I decided to use minimum position sizing for each and every trade today. 100 shares. I have been tied down to staying in a trade and not being able to make any other trade at the same time. As much as I want to concentrate on a particular trade I do need to have the flexibility to enter additional positions on other issues, or even adding to the same one should an idea work out well. Seeing as I am trading related stocks and ETFs I figure this is not too great a stretch.

YRI today:

Not a bad trade. 20 cents per share. So only $20 for my single lot gross profits, but that is not specifically the point here. Getting good trades does not mean making loads of cash.

HGU:

I was not even going to do anything with the bull Global Gold ETF but it was setting up so sweet that I couldn't help myself, besides, I kind of wanted to do some simul-trading.

6 cents per share gained. It didn't run like it might have and I didn't exit as early as I could have, letting the stops work for me right now gives me the minimum gains for these small momentum moves...if I am breaking even the end will be catching the larger moves and then seeing profits. So I don't mind.

HGD:

This is my plan now, play the stocks for the up moves, perhaps play the bull ETF in conjunction with those moves and play the bear ETF for the downside...at least until I get going and have some cash to add to my margin account to do some real short selling, then I will probably give up the ETF altogether. I am not as impressed with them as I thought that I might be.

These two trades totaled 4 cents per share gain.

Seeing as everything was 100 shares I lost a bit due to commissions and small position sizing BUT the small sizing let me not have to consider, as much, the downside if I was wrong....Of course I would pick a marginal day (not a loser, just marginal) to drop my sizing.

Today's total are $30 gross, about -$12 net due to commissions and fees. Trading stocks between $8 and $11 @ 100 shares makes it hard to dig out from a $11 commission unless some decent moves are captured well. But that is all part of the game.

Now, had I been trading full positions, I would not have been able to trade HGU as I was in YRI so the totals would be like this:

YRI for 20 cents at 300shares = $60

HGD for 4 cents at 400 shares = $16

Commissions and fees = $36

Net gain = $40.

Considering the small moves today and not much trading to pick from I still would have been happy enough to have seen a small gain.

Jeff.

Horizons BetaPro Exchange Traded Funds

More on the ETFs, specifically the Horizons offerings.

Here is a link to their website for any who want to do more reading:

Horizons BetaPro ETFs

Something that I did not mention in my last post was how these folks are doing what they are doing. Unlike a typical fund, like a mutual fund, they are not buying a bunch of stocks in the index to emulate the index, nor are they buying any of the underlying commodities. They deal in futures contracts instead...due to a few reasons that they mention in their FAQ.

Here is a complete list of their products:

Horizons BetaPro ETF Summary

I just did a quick check on a leverage comparison for HGU and Global Gold. (GG)

Since Oct 25th (I just picked a nice long gain as an example) to Feb 11th

GG gained $187.55 or 123%
HGU gained $11.18 or 286%

There is mention of rebalancing and daily valuation of the fund, so I suppose this seeming disparity comes from the effect of some level of compounding at work, and it was mentioned on the HBP site but I discounted it as marketing hyperbole...perhaps not.

This does make a good case for beating the market performance. Seeing as 123% is still a good return for a 3 month investment, 246% would be spectacular and an extra 40% definitely adds a bit of gravy. I expect something similar following the HGD bear fund in a down turn...

Jul 15th to October 26th, another arbitrary period the GG dropped over three months.

GG lost $224.14 or 81.3%
HGD gained $68.45 or 187%

Well, considering that gold was dropping, overall, this is a great way to turn the loss on it's head.

Interesting is that the additional gain over the straight 2x leverage is 15% greater than the leveraged percentage return.

None of this makes much difference in my daytrading scenario but certainly makes a great case for using ETFs in my future longer term investments.

From the listing of ETFs that Horizons has you can do the exact same thing with financials, oil, energy, bonds and other popular indexs. I was playing with HGD as a bear strategy against the true stock TLM (Talisman Energy) and earlier I was playing with HGD again AEM (Agnico Mines). I now firmly believe that I have found an alternative to stocks completely.

The funny thing is that six months ago I would have scoffed at the idea of trading ETFs.

Jeff.

Exchange Traded Funds

I decided that I should probably know more about the Exchange traded Funds (ETFs) as they seem to be what I have gravitated towards for my intraday trading.

I have noticed some interesting correlations and some anomalies between the Horizons Beta Pro Global Gold bull and Bear funds and the actual Global Gold index itself which lead me to do some reading to see if I could explain some of what I was seeing. I am not certain why but I was treating the bull and bear ETFs (HGU and HGD respectively) as if they were separate stocks and using the S&P TSX Global Gold index for reference. This has not been working for me as well as I anticipated.

So, the short story is that the two funds that I am playing with are inverse funds and leveraged by 2 times.

Horizons BetaPro Global Gold Bull Plus Exchange Traded Fund, HGU on the TSX.

The fund is directly tied to the performance of the S&P TSX Global Gold Index and leveraged 2 times. I thought that a leverage like this was a direct calculation of 1 penny equals 2 pennies so I had some trouble imagining the valuation of the fund compared to the stock and envisioning the movement it just looked wrong, so now I will clarify this.

If the Global Gold rises by 1 % then the ETF rises by 2%. So each $100 invested will return $2 at the end of the day. If it drops by 1% the the fund drops by 2% and you lose $2.

Unlike a stock using margin as leverage this does not put you in the situation of having a margin call and potentially losing more than you put in as you can only lose a percentage of what you invest, similar to a stock bought with cash.

The next day you start out with $102 and it rises 1% again, the ETF rises 2% and you gain $2.04. Effectively compounding daily. The reverse scenario has you losing $1.96. Again this is not unlike a regular stock as a daily percentage change is still based on the day's opening price.

Horizons BetaPro Global Gold Bear Plus Exchange Traded Fund, HGD on the TSX.

Same as above in the reverse direction.

The interesting part about using these funds to trade, as I am, is that I should be able to track only the Global Gold index and make trades between the two funds, HGU and HGD, while only following the index and ignoring the funds themselves. I have been doing this part way as I have followed HGU mainly and traded HGD just by that chart and it seems to get me where I want when I want...even though the trade may not go in my favour the entry and exits are clean. Lately I have noticed the strength of the index at the various pivot points being more relevant than the pivot points in the ETFs. In order of relevance it turns out the the index is first, HGU is second and HGD is third.

Where this leads me is to using the one main chart and just "pretending" that a long position in Global Gold is a bull ETF buy and a short position in Global Gold is a bear ETF buy. The best part about this, down the road, is that I can hold open positions in both the bull and bear funds at the same time. In theory I could open a position in each of the funds with an equal dollar value and hold them all day long and sell at the end of the day and only be down by the commission...an almost 100% hedge.

This also leads me to adopt a strategy that is used in options trading and I thought about applying to ETFs a few months back but had some conceptual troubles with the possible trading plan. More on that another time...the short story is that it includes placing opposing limit orders and catching only the breaking ETF. It needs some work though.

Today being Friday I try to normally not trade, but I tried a couple of trades anyway, no luck, so I decided that I would wait this out and work on some historical charting to check my "One Chart" method. I see now that the price has really just wallowed about with no big moves except out of the gate.

Jeff.

ETFs for gold...HGU and HGD. Day 1

ETFs are what they are, an Exchange Traded Fund so their basic price follows the related fund closely with some variance in the actual purchase and sale price due to the auction style of trading, just like a stock in that regard...there is a spread between the bids and asks. Enough about that.

HGU - Horizons Betapro Global Gold Bull Plus Fund
HGD - Horizons Betapro Global Gold Bearl Plus Fund
SPTGD - TSX Global Gold Index
AEM - Agnico-Eagle Mines, a stock for some reference as I am familiar with it and it tends to lead the index slightly.

I will only chart HGU for today's trading (fake)

The short story:

0934h Buy $11.23 Sell $12.00 Gain 77 cents ps Return 6.9%
1009h Buy $12.07 Sell $12.30 Gain 23 cents ps Return 1.9%
1030h Buy $12.31 Sell $12.50 Gain 19 cents ps Return 1.5%
1105h Buy $12.31 Sell $12.51 Gain 20 cents ps Return 1.6%
1154h Buy $12.32 Sell $12.44 Gain 12 cents ps Return 1.0%
1258h Buy $12.62 Sell $12.89 Gain 27 cents ps Return 2.1%

$ 1.78 gain per share or 15% overall return on trades

That translates into $474 virtual dollars profit or 11.9% return on portfolio.

The slightly longer story:

The main reason that I did not actually trade these today was due to the fact that I slept in, health issue and missed alarm, I think I did not wset it properly. I ended up with 10 minutes to do my chart setups for a whole new bunch of stocks and funds. So I saw the first trade setup and just did not have all my ducks in a row.

I followed some pretty hard and fast rules for these trades though once I got them going. Being a newish trading setup I decided, after missing that first large move, that I was asking for trouble trying to make some real money today.

Entries were based on limit orders set 2 cents higher than the pivot point being tested. I could also use market orders to be sure of a full fill each time but I will keep to limit orders to reduce the possible jumpy trade price filling me higher than I would like.

Exits were based on the next pivot target, following if momentum was good and exiting before targets if the buying weakened.

I did track a few trades for HGD, the bear version, but didn't count them as they were less than stellar, profitable but small and really were against the trend altogether, just for practise.

Jeff.

Crude Oil, HOU and HOD ETFs

Someone asked me about investing in oil the other day. I am not going to be doing so but I do watch other charts and markets seeing as I have to buy gas and it affects almost every facet of life somehow. So one method of offsetting the additional costs of oil induced increases is to own oil stocks that pay when the oil price is high. Dividends are nice but not necessary...in my view.

So, this brings me around to another of the Exchange Traded Funds (ETF).

The short story is that these funds track the sector, or commodity they are named for.

Horizons BetaPro NYMEX Crude Oil Bull Plus ETF... or HOU.TO.


This is a fairly new fund so the 200sma is just getting going, les thana year old. I circled the nicest positive divergence you could ask for. The price is levelling out and the MACD has been steadily rising since October. Personally I would give this one another chance for a pullback before buying in but if a little risk is in the books then it could be purchased now too. Perhaps scale into the investment.

The nice thing about this is there is little fear of the underlying company doing anything weird (Enron anyone?) as there is no underlying company.

Here is a zoom in of the main activity lately...

It looks to me like $10 is about as low as it can go...but that certainly is not a guarantee. Once the red 30sma crosses the blue 50sma I would consider it back in the bullish territory...by then the price could be back up to $20 quite easily. The trick is whether it will stay up or not. As a position trader I would not wait quite that long anyway...one more low to see where the support really is then it would be time to read the chart again. Anything under $10 would be worth the risk for a small position.

This brings back memories of the CTP strategy.

As I will be day trading my full account I don't even have room to sneak 100 shares of this ETF or I just might...although if it drops to $10 even, again, it would certainly be doable, I'd make it work for that.

Here is the inverse ETF, Horizons BetaPro NYMEX Crude Oil Bear Plus ETF... or HOD.TO

This is for those who want to play against oil climbing.

Jeff.

ETF's HED and the Capped Energy Index

Here is a sample of a down day and what an ETF trading might be able to do in place of short selling the regular stocks.

December 22nd, 2008.
SPT/TSX Capped Energy
Dark blue is the previous day close
Light blue is the Primary Pivot point
Green are the S1, S2 and S3

Yup, definitely a down day as the index lost close to 6%. The S1-3 did not mean a whole lot here but there were some bits of support as the price fell and some definite resistance around the $199 mark.

Suncor for the same day

Support fell in some key points and would have been nice setups for some short selling. Too bad I was not watching for these that day. I did trade it and had five trades 3 long fighting the trend and two short. 65 cents gained long (I captured the first big move from $24.40 to $24.90) and only 52 cents gained short as I did not watch the market at all after the first long trades, I got busy with other stuff and came in later in the afternoon when everything had already done most of the dropping.

HED, Horizons BetaPro S&P/TSX Capped Energy Bear Plus ETF, same day

Buy $21.33 Sell $21.64 Gain 31 cents ps Return 1.5%
Buy $21.91 Sell $22.27 Gain 36 cents ps Return 1.6%
Buy $22.61 Sell $23.01 Gain 40 cents ps Return 1.8%
Buy $23.11 Sell $23.31 Gain 20 cents ps Return 0.9%

$1.27 gain per share or 5.8% overall return on trades

This would fall under my multiple lot position sizing as well.
I need to actually make some ETF trades to know how they will behave. The volume is a little low bit the price is more dependant upon the underlying index than the bids and asks. It can indicate a sentiment but not a definite directional move. One thing that I noted today while watching a few ETFs is that the quote spread can be substantial. They just don't feel the same as a stock. It might be partly due to the reverse movement as well as the non-stock quotes.

I think this will be a reasonable substitute for short selling, though it may only be used on those definite downtrend days as I don't think it a great vehicle to attempt to use for those quick drops in price that I might normally try a short while in between long trades.

Jeff.

Exchange Traded Funds (ETF)

Here are four charts that might be examples of what I would be tracking at once.

This first is the Horizons BetsPro S&P/TSX Capped Energy Bear Plus ETF for last Friday afternoon trading. This tracks the TSX capped energy index inversely.

This second chart is the same period for the Bull version of the fund as it tracks the energy index directly. Note that the price is not in the same range.

This is the S&P/ TSX Capped Energy Index itself.


This last chart is Suncor Energy.




The correlation of Suncor and the TSX Energy index is more obvious when looked at in better detail but the pattern is pretty obvious.

The volume of the two ETFs is substantially lower than SU. The volume is not a factor in the ETF's though as they are tracked to the index with some variance due to the bid/ask spread of the ETF. I need to watch these ETFs to see how they behave and it will be different trying to trade a derivative that is not driven by the traders trading it directly.

It is worth noting that ETF's can be traded using all the normal order types available to use with regular stocks, limits, stops, shorts, probably VTSOs and I understand that there are even options on these as well...although I don't anticipate using those.

There are a number available for most of the popular indices, gold, natural gas, oil, financial etc.

Jeff.

Questrade, TFTA, a change of rules, mine

This whole last few months I've been going on about the Tax Free Savings (Trading) Account (TFTA) and how I was going to use it for all of my trading. Yesterday I filled out the application and forwarded it to Questrade. They have a method of e-signing the forms, which may be only available to existing customers, that sped up the whole process. All I have to do is fax them a copy of my driver's license, EFT some cash and I should be ready to go in short order. Pretty simple and quick.

So, in reading the details I ran across the phrase "capital gains" when referring to what can grow tax free within the account. It occurred to me that the profit from short selling stocks is not, technically, capital gains and if push comes to shove with the government they are treated as regular income for tax purposes...again, not capital gains.

I used the online help feature and had my answer in a minute. No, shorting is not allowed in a TFTA. I actually should have known this as I knew that shorting was not allowed in an RRSP account either. I was blinded by the fact that I could short in a margin account and the gains looked really promising...my research was lacking.

I quickly went back over all of my previous trades to see how much of my profit would have been from short selling. This was easy enough as I have always kept a long/short profit ratio for all my tracking spreadsheets. Note that this is not a ratio of number of trades, just profit.

Overall I am running about 1:1. So half of my trading profit would not be counted. Seeing as my performance is close to 2% per day I would be just shy of my daily goal if I dropped half of my trades...or my trading profit. I consider that I usually stop at a daily maximum of 6 trades, more often 4. So if I was concentrating on making that many trades and with long only positions I may have been able to make 75% of the trades. So I might have seen 1.5% per day.

My options to adjust my trading plan include:

1) long only trades with the same plan that I have been using, result may be 25% - 50% reduction in profits

2) long in the TFTA, short in margin, result is taxable (max marginal rate) for all short profits so the overall effect would be pretty close to option 1), within 10%

3) variation of option 2) in that all profits at year end for shorts are contributed to my RRSP account whereby the taxation is negated but the downside is that these will be taxed upon withdrawal... perhaps at a lower tax rate at the time

4) variation of option 1) by using only the TFTA, trading my favourite stocks long and shorting the index that they are tracking through the use of a bear Exchange Traded Fund (ETF), result is the same tax free profit potential as I was planning on originally

Well, option 4 becomes the no brainer solution to my dilemma it would appear. In investigating the ETFs I start to wonder if I can trade them exclusively.

This would be easy enough as I just run the bear and corresponding bull ETF side by side with the related index they track and the TSX for the overall market and trade them back and forth. When one is rallying the other will be pulling back which means that one or the other will always be gaining...except in a true sidways market move. The difference in prices will necessitate using different position sizing for each which will look after the scaling according to the size of the move. Roughly a 1% gain in one will yield a 1% drop in the other.

In the interest of keeping it simple I think I will start out with option 1) only and see how it goes. I believe that the stocks I have selected will be seeing some gains over the next while so long positions will be many, I may have to increase my time trading by a bit though. If that does not pan out then I will play with the ETF and see how they work out for trade executions and perhaps mix it up from there.

I will have to wait for my TFTA to get going first as I really want to stay away from any gains in this 2009 tax year.

I should have known it was not going to be such an easy ride and that the testing was not yet complete. Too bad as I would have liked to have had this ironed out earlier. If I do some testing with the expectation of a loss then it will reduce the capital in my account as I cannot just "top it off" after testing is complete. $5K contributed is the limit no matter the trading losses incurred...unless I over-contribute and pay the monthly penalty. Questrade may enforce the maximum as their policy is worded in such a way at that is possible.

Jeff.

ETF technical, HXD.TO

I was curious how the various ETF's were fairing, this one in particular. I was working on an ETF hedge entry plan that would make trading the opposing ETFs (bear vs bull) in such a way as to make them a risk free and guaranteed profit trade similar to a collar trade in options trading...sort of. I dropped the idea as too complicated but I may take it out and dust it off another time.

Meanwhile...

HXD.TO, Horizons BetaPro S&P/TSX 60 Bear plus.

Here is a five month daily chart, ending in September as the rest is just more volatility.

The blue trend line was the downtrend that I placed back in the early spring, I have not touched this chart in months. The yellow was the mean, roughly. While it was broken back in April I was going to watch the upper line. The SMAs are 10 - red, 30 -blue and 200 -green. The lower trend channel line is not present due to some idiosyncratic StockCharts isssue, but it was below the mean about the same as the upper is above. Had I been playing my CTP strtegy I would have been buying in the mid $15 range and targeting for the breakout.

I loved the convergence of all of the averages and the trend line as this just screamed "buy, buy, buy!" as the price hovered about the 200, then broke and tested it as support twice on the way up.

It's charts like this that make me want to drop day trading and return to the swing style of trading...maybe another time. Even currently the price is bouncing along the 50 sma nicely with five tests as possible buy in points over the last four months.

The best part, for those who like traditional trades, is that this does not need to be shorted to play the other side. Just plug HXU.TO into yur charting software and you now have the inverse of the same ETF, the Bull. Because the price is smaller for it now the averages work slightly different. One could just ratio the prices and buy one when selling the other to stay in a trade and keep the money working constantly while even overlapping the exit and entries a bit for a bit of a hedging factor. Just dump the one that moves the wrong way.

Back to HXD for a moment...Because this is tied inversely to the TSX this is not so much a chart of this fund as the trends would work exactly the same on the index chart that it tracks, inversely. The volume on this means nothing as there is no underlying value so it only indicates that more people are interested in the ETF as it relates to the TSX, not for it's own sake.

I have had trouble with the idea of ETF's for some time due to their derivative nature but they can make an interesting trade none the less. Some of them are priced reasonably for anyone to play around with.

Just another tool in the tool box.

Jeff.