Get Rich - Stay Rich - Investing for Monthly Income

Posts Tagged ‘how to trade the CNBC Portfolio Challenge’

How To Trade the CNBC Million Dollar Portfolio Challenge (Part 4)

One key to success is to trade the current trends.  This is true for the volatility of the currency markets.  For those wanting to trade currencies but are not using FX trading, you can use the ETFs for all major currencies in the CNBC Portfolio Challenge.  The best market trend I have found so far is that the U.S. Dollar is rallying over the last month.  Use the PowerShares DB US Dollar Index Bullish Fund (UUP) to go long the Dollar.  This ETF is up 8% in the last month.  Of course, you want this to be a smaller position in your portfolio as the rally continues over the short-term.

PowerShares DB US Dollar Index Bullish Fund (UUP) is a separate series of PowerShares DB US Dollar Index Trust (the Trust).  The Fund’s subsidiary is DB US Dollar Index Bullish Master Fund (the Master Fund), a separate series of DB US Dollar Index Bullish Master Trust (the Master Trust).

The inverse trend is the Euros continued decline.  The ETF play is the ProShares UltraShort Euro (EUO) that is a super-short Euro play.  This ETF is only up a little over 4% in the last month.  However, if any countries in Europe default or increase their possiblilty of default then the EUO will be a great play as it is super short for the EURO.

Both ETFs, UUP and EUO are shown in the chart below.

Click to enlarge

 

 

 

Your ads will be inserted here by

Easy Plugin for AdSense.

Please go to the plugin admin page to
Paste your ad code OR
Suppress this ad slot.

 

 

Also see these articles:

How to trade the CNBC Million Dollar Portfolio Challenge (Part 1)

How to trade the CNBC Million Dollar Portfolio Challenge (Part 2)

How to trade the CNBC Million Dollar Portfolio Challenge (Part 3)

 

Check out the Monthly Income Investing Plan here.

How To Trade the CNBC Million Dollar Portfolio Challenge (Part 2)

In the last post titled How to Trade the CNBC Million Dollar Challenge (Part 1), I discussed how to use leveraged ETFs to trade the market volatility.  I discussed using two ETFs that track the S&P 500 but are levered to return twice (200%) of the daily performance.  The first ETF is Proshares Ultra S&P 500 (SSO) that is used to capture the UPSIDE movements of the S&P 500.  The pair of this trade is the Proshare UltraShort S&P 500 (SDS) that is used to capture the DOWNSIDE movement of the S&P 500 at twice (200%) of the daily performance.  Basically, you but the Levered ETF that is moving with the market – SSO for increases and SDS for decreases in the market.

Today’s pair trade follows the same trading philosophy as the S&P 500 lefered ETFs.  This trade will use the QQQQ or Nasdaq that is frequently classified as being more technology companies as well as more volatile.  ProShares Ultra QQQ (QLD), formerly Ultra QQQ ProShares, seeks daily investment results that correspond to twice the daily performance of the NASDAQ-100 Index.  ProShares UltraShort QQQ (QID), formerly UltraShort QQQ ProShares, seeks daily investment results that correspond to twice (200%) the inverse (opposite) of the daily performance of the NASDAQ-100 Index (the Index).  These two ETFs will move in opposite direction but not always with the S&P 500 ETFs discussed yesterday.

The CNBC Portfolio strategy is to buy the ETF, QLD or QID, based on the movement of the QQQQ.  At the market close on 9/29/2011, the QLD was down while the QID was up for the day.  The ETF track the Nasdaq 100, QQQ, was down for the trading day.  Therefore, your best trade for yesterday was the QID which is used when the QQQ is down.  You should watch the technicals of the QQQ, QID, QLD to determine the intraday/short-term trend to determine which levered ETF to be invested in each day in your CNBC Portfolio.  The chart below compares the QLD to the QID over the last month.  As you can see, these ETFs move in exactly opposite directions.

For your CNBC Portfolio, you should be invested in the SSO or SDS for one trade and the QLD or QID for your second pair trade.  You can adjust these positions as necessary to stay with the levered ETF moving with the market direction of the S&P 500 or the Nasdaq 100 index.  This is an excellent trading strategy to win the Million Dollar Challenge and the weekly prizes.

Click to enlarge

Share Some Winning Cash
Archives