2012 is upon us and it’s time to release two new trading strategies.

Both of these trading strategies were inspired by Dan Zanger, the trader who was featured in Fortune Magazine because he took $11,000 and turned it into $42 million within two years.

One of the secrets to Dan’s success was his use of price and volume. This got me to thinking about how price and volume signals can be used to create wealth in the stock market. After reading about Dan in 2000 I set out to see if I could crack the code to stock market wealth with price and volume signals like Dan did.

I didn’t want to do it with stocks since they are at the mercy of whatever sector is in fashion at the time (and I didn’t want to have to keep track of sectors also).

The logical decision is to track the price and volume of Indices since they are an overall picture of all sectors and offers diversification. Unfortunately, back in the early 2000’s you couldn’t trade the indices with any success.

It wasn’t until a few years ago that ETF’s emerged and gave us a vehicle to play the markets up or down. Perfect for what I was attempting to do.

So in 2009, with the advent of ETF’s (especially inverse ETF’s) I was able to implement my dream and create two trading strategies using price and volume signals to signal the proper time to use TNA or the proper time for TZA.

It’s been three years in use and while neither strategy gained every year, they did show a profit if used two years or more. I recommend the use of both. Half your funds on one and the other half on the other (rebalance every year). Using both strategies at the same time has produced a 50%+ GAIN EVERY YEAR! Below are the full stats.

Strategy 1: Buy & Hold Description: Named because it only offers 3 trades per year. For the person who doesn’t have much time but wants big returns. # of trades per year on average: 3 % Winners: 64% Returns: 2009: +79.14% 2010: -11.13% 2011: +172.43%

Strategy 2: 100% or Even Description: For the person who is willing to lose one year of time (break even) in exchange for a 100% return if successful. # of trades per year on average: 7 % Winners: 59% Returns: 2009: +108.93% 2010: +101.38% 2011: -2.70%

If you use both together, half your funds on one and half your funds on the other, you can get a more diversified return of:

Average Returns:
2009: +94% (the S&P did: +25%)
2010: +45% (the S&P did: +13%)
2011: +85% (the S&P did: 0%)

The average return of these two strategies is 75% per year compared to 12% per year on the S&P. That’s 6x better. Do you see how powerful these two strategies are?

I’m giving these two strategies away for free to members of my “Go With The Flow” Index Trading System. You do the math. See how fast your money will multiply and then YOU decide if you want to join me and my fellow traders on the inside.

Click this link for more information about my
“Go With The Flow” Index Trading System.

This is the third post in a series of post where I lead my readers to a 43% gain over the last two weeks.

Back on November 1st, 2011 is when I first noticed the signals that the markets were going to move sideways. I informed subscribers to my “Go With The Flow” Index Trading Strategy to move to cash.

Two weeks later on November 15, 2011 I noticed the S&P was forming a triangle pattern. I immediately released the first post in this series alerting all my readers to this pattern and to the upcoming move.

Just as I predicted, the move occured the very next day as the S&P broke out of it’s triangle to the downside. This was the signal to go short on the S&P. To short the S&P, all you need do is buy SPXU. It goes up when the S&P falls.

On November 20, 2011 I posted the second post in this series. I once again alerted my readers here that the S&P broke through it’s support and it was time to short the S&P.

Now that it was clear the S&P was falling it was time to buy SPXU. The new question is, when is the right time to exit SPXU?

To find the answer we turn to a post I did back in 2009. In that post, I described the Symmetrical Triangle Pattern and how to use it to tell when is the proper time to buy and sell a stock (I used IBM in the example). You can use this same strategy whenever you see an index form the triangle pattern.

In the graph below I’ve plotted the proper times to trade the S&P 500.

Since the S&P broke out to the downside, the proper time to buy SPXU (an Exchange Traded Fund that goes up when the S&P goes down) is at the open on November 17, 2011. SPXU opened at $15.06.

The proper time to sell is when it reaches line 4. That occured November 25, 2011. SPXU closed at $17.05 giving us a gain of 16.2%.

If you remember the rules for the Symmetrical Triangle, the support line (or sell price) is calculated by taking the height of the opening of the triangle. This is the difference between the #1 (around 1290 on the S&P) in the above graph and the #2 (about 1214 on the S&P). 1290 – 1214 = 76.

So there you have it. Now all you need do is figure where the S&P was when it broke out to the downside (around 1236). You then take that number and subtract 76 (1236 – 76 = 1160). Line 3 in the graph above represents 76 points on the S&P.

So now you know to close SPXU when the S&P hits 1160 (which it did November 25, 2011).

OK now that we close SPXU it’s time to profit off the S&P as it goes back up. To do that we buy UPRO. It goes up when the S&P goes up. On November 25, after we close SPXU we now move into UPRO. UPRO was $47.61 at the time.

Now that we are in UPRO, we need to calculate when we should close our position. To do that we once again turn to the rules of the Symmetrical Triangle.

The line marked “5″ should now be the resistance line. That is when you should close UPRO. The S&P hit that line on December 1, 2011. At the time UPRO was at $58.71. With a buy price of $47.61, thats a gain of 23.3%.

Now if you take your investment and make 16.2% the first time, then roll it all over and make 23.3% the next time, you would now have a compounded return of 43%!

Where is the S&P going next? I’m predicting it will move lower and trade within the shaded area (see the graph above), or at the least , move along line 5 in the short-term.

Rules for the triangle:
http://www.stocklocater.com/content/symmetrical-triangle.html

Previous posts in this series:
http://www.stocklocater.com/content/market-outlook-for-november-2011.html
http://www.stocklocater.com/content/market-outlook-for-nov-20-2011.html

Click here to learn more about my “Go With The Flow” Index Trading Strategy.

Well my prediction from last week came true. If you didn’t get a chance to read it you can click here to read my stock trading prediction.

In the post I said the market is about to make a big move to the upside or downside starting on Wednesday of last week. As we see in the below chart the S&P fell for three days straight, broke through it’s support line, and now lies at it’s lowest point in over a month.

I take it you all followed my advice and moved to cash and protected yourselves from losses, good job.

Now we are ready to profit off the markets next big move. I see it happening around Tuesday, maybe Wednesday, of this week. I see a potential gain of 10% in a matter of days.