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.

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.

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.

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.

In the S&P chart below (chart as of November 15, 2011) I’ve marked some green lines that are showing the S&P’s support and resistence. If you notice we have a wedge pattern that the S&P has been trading within for the last two weeks.

I’ve marked a circle on the chart. That circle was when I told subscribers to my “Go With The Flow” Index Trading Strategy to move into cash. As you can see the S&P is currently in the same spot it was back on October 31 when we moved to cash. We have been going with the flow.

Soon the S&P will break out of the current wedge and by the looks of things, it could happen as early as Wednesday the 16th. As soon as you see the S&P close above or below the green line, that’s your signal to go long or go short.

If you don’t have the time to monitor the markets, or are not sure what to invest in when the signal comes, join my “Go With The Flow” Index Trading Strategy. I’ll email you when the time is right and I’ll email you what I’m buying to you can copy and do the same as I. Easiest way I know to trade.

Basically, you buy and sell an Index instead of stock in a company. You can trade the DOW, the Russell 2000, the S&P 500, or whatever index you wish.

The advantages to trading an Index instead of a stock are many.

1) When markets rise, only 75% of stocks will rise with it. There is no guarantee that the stock you picked will rise with the market. However, with Index Trading, if the markets rise you are guaranteed to have a winner as 100% of the Indices will rise with it.

2) Another great advantage is LEVERAGE. With stocks you have to use margin to get leverage. With Index Trading you never borrow money and you can leverage your portfolio up to 3 times return. Fir example, if the markets rise 1%, you get 3%. Best leverage there is.

3) You can make money when the markets drop so much easier with Index Trading. With stocks you have to short-sell and are at the mercy of your broker if things go wrong. With Index Trading you never need to borrow shares to short-sell and therfore are always in complete control of your investment.

Now that I’ve laid out the advantages, let’s see how it all works.

Step 1: Pick an index to trade.
Step 2: Decide how much risk you are willing to take. 1 = minimal. 2 = moderate and 3 = maximum.
Step 3: Now that you know the index and how much risk you are willing to take, now you must find an Exchange Traded Fund (ETF) to trade. Do a Google and find the ETF that suits your needs.

Example: I want to trade the Russell 200 and I’m willing to take moderate risk (2). I can Google “Russell 2000 2x ETF”. To search for others simply change name of the Index and change the number based on your risk.

Searching Google for the above we find that UWM and TWM come up. Both are 2x leveraged ETF’s based on the Russell 2000 index. UWM will profit when the Russell 2000 goes up. TWM will profit when the Russell 2000 goes down. So you see, you can make money no matter which way the market goes.

Step 4: Determine market direction. Now comes the tricky part. This is where most traders get it wrong. You need to be certain of market direction. If you are sure the markets will rise, buy UWM. If you are certain the markets will fall, buy TWM.

With Index Trading you don’t need to worry about if a company will be profitable, if the management will fall apart, or even if the company you are buying stock in is going bankrupt. All you need do is be correct about the market direction. If you don’t know how to determine that I suggest you spend a few years learning technical analysis.

OR

You could take the easy way out. I currently run an Index Trading portfolio (I call it Go With The Flow) that as of September 7, 2011 is up over 51% (while the DOW is only up 1%). The easy way is to just partner with me and let me monitor the markets for you. I’ll tell you when the markets are going up and when they are going down. No need to waste years studying charts, etc..

If you want the quick route to gains, please visit my Index Trading Strategy page for more details on how you can partner with me.