the Trade-Radar + TradingStockAlerts blog

Every week we scan and test all the stocks on the major exchanges as part of our Alert HQ process. A byproduct of the Alert HQ process is the Trend Leaders list, our collection of stocks in strong up-trends. These stocks are registering strong signals using Aroon analysis, DMI and MACD. They are also at least 1% above their 50-day exponential moving average. This week's list is now available at the TradeRadar site on the Trend Leaders page . TrendLeaders paint depressing picture of a bear market -- This week we have 61 stocks and ETFs on the list. The total number has been declining steadily over the last few weeks. The nature of the securities comprising this week's list show how badly stocks in general are performing - more than half of our Trend Leaders are inverse ETFs . Not only do we have a bunch of the usual ProShares ETFs on the list but we see that the Direxion Bear 3X ETFs are well represented as are a number of Rydex Inverse 2X ETFs. Here is the list of inverse ETFs....

I woke up this morning thinking that the financials have had their run. The ProShares Ultra Financial ETF (UYG) has moved up about 20% from its recent bottom over the course of just a couple of weeks. With the Fed decision looming, I thought it best to take profits. If the Fed only cut by 25 bps or didn't cut at all, I thought financials, and probably the rest of the market, would plunge. On the other hand, with a 50 bp cut widely expected, I felt there wouldn't be that much upside. Especially as it may signal that the economy is in worse condition than many thought. In any case, after the Fed announcement, investors will be getting back to focusing on the economy and the financial state of those stocks making up the sector. And that may not be a good thing. In terms of the economy, there are so many mixed signals that one can't be blamed for taking a cautious stance. In terms of the financial companies themselves, most of the major names have reported earnings already. The...

Graham Corporation (GHM) is a company located almost in my backyard, so to speak, so it was with interest that I reviewed their third quarter earnings announcement this morning. Graham is a small-cap company in the industrial sector. They are an equipment manufacturer for the oil refinery, petrochemical, power generation, fertilizer and pharmaceutical industries, etc. Its products include steam jet ejector vacuum systems; surface condensers for steam turbines; vacuum pumps and compressors and various types of heat exchangers. The numbers -- Sales were up $6 million over the previous year's quarter but down $3 million sequentially. Net income for the third quarter was $3.8 million, or $0.74 earnings per diluted share, compared with $666 thousand, or $0.14 earnings per diluted share, in the prior year's third quarter. On a sequential basis, earnings were down $600 thousand compared to the previous quarter. Domestic sales were 52% of total sales for the third quarter of fiscal 200...

When I first began writing this blog, I was fascinated with the ProShares Ultra ETFs. I believed that by using the TradeRadar software, I would be able to time the market with sufficient accuracy to profit in upward trending markets with the ultra long funds and profit in down markets with the ultra inverse funds. The reality has turned out to be more difficult than I anticipated. As some of you who commented on those early blog posts knew, market timing is no piece of cake, even when you have a software tool to help. It seemed that I ended up chasing trends that did not play out with sufficient duration to make the trade worthwhile. My trading record, such as it is... My record has not been encouraging. In my first attempt at using an ultra inverse fund, I purchased QID , the Ultra Inverse QQQ ETF, in early February, before the market broke down later that month. The NASDAQ began to recover soon after and I ended up losing over 5% on the investment because I held QID too long. Withou...

It has only been a week or so since I recommended Health Care Properties ( HCP ). After four days of relentless selling the stock has now completely reversed the TradeRadar BUY signal and plunged back into the SELL zone. Uncertainty in the credit markets and non-stop bad news from the real estate sector is wreaking more havoc on real estate stocks of all kinds. Still, the fundamentals of this REIT remain attractive. Indeed, the yield has even improved and is up around 6% now. Technically speaking, though, the charts tell a grim story. My strategy is to try to buy AFTER a bottom has been established. Unfortunately, it looks like HCP threw me a real head fake and has further to fall. We will keep an eye on it and be prepared for when it does begin to turn around.

Today MarketWatch wrote that Zilog Inc. ( ZILG ) cut its fiscal first-quarter sales outlook, saying it would be 11% to 13% lower than the fourth quarter's $19.1 million. Based on fiscal fourth-quarter results, the San Jose semiconductor company is expecting fiscal first-quarter sales in the range of $16.6 million to $17 million. The company also said it still expects to post a quarterly loss of 16 cents to 18 cents a share. This will make it six quarters in a row that Zilog has lost money. And yet, as of earlier this month, it had tripled in value since its low point of about $2 back in March of 2006. Founded in 1974, Zilog is a supplier of 8-bit microcontrollers. A microcontroller is a computer-on-a-chip that is optimized to control electronic devices such as motors, remote controllers and user interfaces on appliances and various other gadgets. Microcontrollers are essentially a small PC on a chip and typically include a central processing unit, different kinds of memory and vari...

My two favorite bearish plays have had a good run the last few days. The ProShares UltraShort QQQ ( QID ) and the ProShares UltraShort Real Estate ( SRS ) ETFs have been the only glimmer of pleasure in the portfolio lately. I posted over the weekend that I was struggling with the idea of hanging onto QID in the face of the latest set of new highs on the major averages. I am glad that I did. The precipitous drop in the NASDAQ bears out my fears that the current rally was over-extended. The rise in interest rates and the realization that a market supported by liquidity was vulnerable to rate increases took its toll the last few days. With QQQQ well below its 20-day moving average and close to its 50-day, the chart is looking weak. As for SRS, it more or less tracks the iShares Dow Jones Real Estate Index ( IYR ). And, boy, does the IYR chart look bad! Rising rates are a killer for real estate, even REITs, and IYR is certainly taking it on the chin. Having fallen below a trend line a...

The iShares Dow US Real Estate ETF ( IYR ) just fell out of a trading range today. Looking at the chart below, you can also see it happened on a pickup in volume. I have written previous posts on how the problems in subprime mortgages were not really affecting the commercial side of the real estate market and, indeed, real estate investment trusts have held their value much better than the home builders. Unfortunately, the continued dismal news from the housing sector lately must finally be taking its toll on the REIT sector, too. With the value of real estate falling in some markets, perhaps rental properties and condos are not the attractive investments many REITs originally thought they were. With reports of retail sales down, building or owning malls may not be as lucrative as it once was either. I have mentioned before that there is an inverse ETF that more or less tracks IYR. It is the ProShares UltraShort Real Estate fund ( SRS ). You may want to check it out. IYR will pr...

I wanted to write a small post to describe what steps I took that led me to believe it was time to bail out of QLD , the ProShares Ultra QQQ ETF, and jump into QID , the ProShares UltraShort QQQ ETF. First, general intuition came into play. I was not alone in feeling that the markets were over-bought. There was plenty of discussion on this topic in the financial press and on financial web sites and blogs. The economic news continues to be somewhat downbeat so the current healthy earnings season and rising stock prices came as somewhat of a surprise. This lack of correlation between the economy and stock prices sounded a cautionary note. Checking the StockConsultant.com site, which is one of the tools provided on the TradeRadar blog, my overbought assumption seemed to be reinforced. The site showed QQQQ, for example, to be at the top of their proprietary RallyBand and the reversion to the filtered trend or down to the bottom of the RallyBand seemed to be the most likely next move. ...

Like many other investors, I have been enjoying the recent run-up in equity markets but have worried that it has been a bit overdone. It seems that every piece of news, good or bad, resulted in the market advancing. This is something that can't go on forever. This afternoon, with QQQQ down about 1%, I pulled the trigger and sold the ProShares Ultra QQQ ETF ( QLD ) and bought the ProShares UltraShort QQQ ( QID ) again. QLD was sold at $90.28 for a 2.7% gain over the course of under three weeks. QID was bought at $48.39 and ended the day at $48.53 for a 0.4% gain. If the mood of the market is going to change now that the enthusiasm of earnings season is over, bad news will be interpreted as bad news, not ignored. For a list of all the things wrong with the market these days, check out this post by Doug Kass .

I have written about the ProShares Ultra funds in previous posts. I would like to recount some of my observations on using these funds to capture gains on swings in the market. My premise has been that with reasonable market timing, an investor should be able to jump in and out of these funds and capture a reasonable portion of profits in both market downswings and upturns. I chose to experiment initially with the ProShares UltraShort QQQ ( QID ). The NASDAQ seemed weak back in January and February so I loaded up on QID. Sure enough we got a market break in late February. As the market tanked, QID gained at twice the rate the PowerShares NASDAQ 100 ETF ( QQQQ ) declined. So far so good. After the initial break in the market, the NASDAQ took a couple of weeks establishing a bottom and then began rising. I watched as my profit disappeared. I held on because economic readings led me to believe that the market would move lower rather than rise to new highs. I, and many others with a...

With what at first looked like a spasm in the market now displaying all the markings of a full-blown correction, it could be time to consider inverse sector ETFs. ProShares has a slate of ultra ETFs that tracks eleven Dow Jones US indexes: Basic Materials, Consumer Goods, Consumer Services, Financials, Health Care, Real Estate, Industrials, Semiconductors, Oil & Gas, Technologies and Utilities. The ultra ETFs are meant to deliver 200% of the performance of the underlying index. These ETFs come in two flavors: long and short (the short funds are often referred to as inverse). The short ETFs go up when the underlying index goes down. The long funds go up in concert with the underlying index. If you are in the bear camp and believe we have further to go on the down side, this could be a good time to identify those sectors that are expected to be most under pressure in the coming weeks or months. In reviewing the charts this week, there was a pretty consistent pattern: big drops starti...

Tuesday was pretty tough in the markets, worldwide. One bright spot, however, could be found among the inverse ETFs that track the major indexes but perform in the reverse fashion. This blog recently recommended the ProShares UltraShort QQQ ( QID ) as its February Pick o' the Month (read the full post ). This ETF aims to go up twice as fast as the NASDAQ 100 goes down and vice versa. Lately this trade was going against us as the NASDAQ moved to a new 6-year high and QID dropped accordingly. I was seriously considering throwing in the towel. Then today QID moved up over 9% and provided some small consolation while the rest of my portfolio tanked. For the post where I initially discussed the use of leveraged long/short ETFs to profit in bear markets, click here .

Ok, I finally sold my last few shares of SanDisk ( SNDK ). Having posted a list of bottom-fishing candidates for this month's pick a few days ago, I expected to choose one of them as the Pick o' the Month and immediately put the money to work. As I mentioned in my post yesterday, however, I have fixed a bug in the Signal Strength calculation for SELL signals in the TradeRadar software. The new version gives the same SELL signal ( click here to view full size) on the QQQQ but now it looks strong enough to give me the confidence to act upon it. QQQQ sell signal. As a result, I turned around and purchased the ProShares UltraShort QQQ ( QID ). The "Ultra" classification means they are trying to achieve twice the daily performance of the associated index; in this case, the NASDAQ 100. So if the QQQQ is going to go down, QID should start moving up and moving up smartly. I have been considering doing this for a while, at least since mid-December when TradeRadar first st...

Introduction Many money management professionals take advantage of various hedging strategies to avoid being whipsawed by the markets and to avoid losing money in down markets. They may use combinations of swaps, options, futures and derivatives to offset risk and to generate returns when traditional investments are losing value. Some of the investment tools used by these professionals are now available to the public. There are several companies that have developed families of mutual funds and ETFs that bundle all these exotic vehicles into easy to understand funds that track common indexes. I will focus on two companies, Rydex and ProShares, as I describe a strategy that will allow you to invest and profit like the professionals. Both companies have products that track, as a minimum, the Dow, the NASDAQ 100 and the S&P 500. What is interesting and pertinent to our discussion here is that they also have funds that track the INVERSE of the associated index. For example, if one fund...