Timing the Market With SPXL

Timing the Market With SPXL

July 29, 2024

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I like listening to smart people talk about money.

But–gosh darn it!–why do so many smart people take a wrong turn at Albuquerque?

What’s their tragic wrong turn? 

They scream, YOU CAN’T TIME THE MARKET.

Which, of course, isn’t true.

Some entry points are clearly better than others. It’s right there on the charts.

How do we find those entry points?

Just wait for the stock or ETF you like to be on sale. 

Here’s a recent example. I didn’t cherry-pick. I literally just looked at the first thing I thought of.

Back on 1/3/2022, SPXL (the S&P 500 3x ETF) was riding high and trading around $145. 

“It’s not timing the market, it’s time IN the market,” say the “research-based” experts.

Cute phrase.

(Pause while I vomit…)

Okay, since we can’t time the market, we’ll get in right now at $145 (see the red arrow below). 

No time like the present and we can’t do better anyway!

How did we do?

Yikes. 

Our timing was horrible. 

Almost two years later we were sitting at $89. 

Good call, experts.

But instead of blindly following cute sayings, we could’ve simply waited until SPXL was lower than “fair value”. In other words, we could’ve waited until price was under the 800 SMA. 

We could’ve entered at any of those red arrow levels. Let’s say we got in around $60. 

How did we do?

For one, we would’ve been nicely profitable by late 2023 when the no-market-timing people would’ve been deeply negative.

For another, our $60 entry would now be at $139 (the price as of this writing).

By timing the market using technical “fair value”, we’d be up over 100%. 

By listening to the experts, we’d still be negative over two years later.

Talk to you soon.

 

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Disclaimer:
It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these sites are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, the publisher, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading.

HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.