FOR THE SECOND WEEK – ProShares UltraPro Short SP500 (SPXU) is your Trade of the Week
*Updated – The content below remains the same from last week, except for the updated chart. The Trade of the Week in SPXU did not trigger last week but still has the potential to trigger this week if the market gets weak. Please use the same trigger, stop and suggested target for this idea as nothing has changed. Please see the chart below showing multiple days on a 15 minute charts of SPY. Until the price of SPY can move above the orange line and prove that we are going to rise from this possible base, we will hold off on a long side call. For this reason the SPXU remains the open Trade of The Week.
In our opinion, the cupboard remains bare in terms of alerts and scans signaling good opportunities to the long side this week. The S&P 500 index continues to knock on the support of the 200 day Simple Moving Average line that so many institutions and money managers monitor. Additionally, the volatility remains high coming into this week. Rather than call this week’s Trade of the Week to go to cash on the sidelines, we are offering a suggestion to participate in profits if the indexes fall lower this week and find the “crack in the ice” on the 200 day SMA.
Using (SPY) as a reference point, 254.67 is the low from last week. ProShares UltraPro Short SP500 (SPXU) will move 3 times as fast as (SPY) in the opposite direction. In other words; if (SPY) is down 1% on the day, (SPXU) will be UP 3% on the same day. Using (SPXU) as our Trade of the Week vehicle, the idea is to get a head start on the lows in (SPY) from last week by getting long (SPXU) early.
The Trade of the Week is not considered live until (SPXU) trades above Friday’s high of 11.81. The suggested stop will be 10.47. The suggested upside target will be 14.50. So we are risking 1.35 to make 2.68 if the selling continues in the major indexes this week. If you are long other positions, you could consider this to be a hedge against any long side losses is your portfolio.