Wednesday, December 17, 2014

UDOW Interactive Stock Chart | Yahoo! Inc. Stock - Yahoo! Finance

UDOW Interactive Stock Chart | Yahoo! Inc. Stock - Yahoo! Finance



Here is a chart of UDOW, the 3x Dow ETF.  I bought UDOW today because I believe there will be a Christmas rally although I don't know how long it will last.  I will probably sell UDOW when it gets to around $142 per share in order to preserve my profit for a 12% gain.  I performed a similar trade back in October-November for a 7% gain in UDOW.  So, in the space of three months, I am expecting to book a total of 19% profit on UDOW trading money for one quarter of the year while this represents only 15% of my portfolio just in case I am wrong.



My reason for buying UDOW today was two-fold.  First, the stock market had declined by about 5% from its previous high similar to the October pullback of 9%.  Since I knew the economy was doing okay, I was willing to bet on a bull rally.  Secondly, $NYMO, the NYSE McClellan Oscillator, showed a very oversold condition of -81 on December 16.  It was also oversold back in October when the market bounced off the bottom.  So, these two reasons prompted me to buy UDOW today soon after the market opened.



As good as this trading plan sounds, you still never know what the stock market will do.  That is why I maintain a diversified portfolio with the other 85% comprised of long stocks for either capital gain or dividends along with bond stocks for additional diversity.  I don't know how many pullbacks we will have in 2015 that will be a big enough decline for a worthwhile trade, but I want to seize the opportunities when I get them.  I am hoping for 6 to 8 chances per year.  If I make an average of 9.5% on 6 trades per year, I will be making 57% each year on my 15% allocation of trading money. 




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