On January 29th, a triple-leveraged exchange-traded fund (ETF) called the ^TNA^ earned a Leveraged ETF PowerRating of 10. 10 is the highest rating in the ETF rating system developed by Larry Connors and his team at Connors Research.
Two days later, the Direxion Daily Small Cap Bull 3x Shares ETF closed higher by more than 7%.
Also late in January, a different leveraged exchange-traded, a triple inverse ETF called the ^FAZ^ earned a major Leveraged ETF PowerRating downgrade to 1.
1 is the lowest rating in the Leveraged ETF PowerRatings system, a category of ETF the data from Connors Research says is best avoided – or sold short – by short term ETF traders.
Five days later, FAZ had retreated by more than 10%.
What Larry Connors and Connors Research introduced with their Stock PowerRatings years ago – and showed again with their ETF PowerRatings in 2009 – is true about Leveraged ETF PowerRatings: when it come to leveraged ETFs, buying the selling and selling the buying works.
And now with the arrival of Leveraged ETF PowerRatings, quantified, backtested strategies for buying the selling and selling the buying in the leveraged ETF market are accessible to retail traders for the first time.
Learn how to trade leveraged ETFs like SSO and FAS? Click here to launch your free, 7-day trial to Leveraged ETF PowerRatings today.
Leveraged ETF PowerRatings are based on the results of thousands of simulated trades in more than 100 of the most widely-traded leveraged ETFs – both regular and inverse – that are available to retail traders.
Leveraged ETF PowerRatings rate leveraged ETFs on a scale from 1 to 10. Leveraged ETFs that earn leveraged ETF PowerRatings of 1 have tended to move lower in the short term more than 80% of the time. The research shows that these low-rated ETFs are best avoided, or sold short, in the short term.
On the other hand, leveraged ETFs that earn leveraged ETF PowerRatings of 10 – the highest rating possible – have made significant short term gains nearly 80% of the time in our simulated testing. These are the exchange-traded funds that ETF traders should consider buying when looking to take advantage at the short term potential for significant upside.
Leveraged ETFs are advanced instruments. Because of this, leveraged exchange-traded funds should only be traded by disciplined, experienced traders who know and understand both leveraged ETFs and themselves as traders.
But if you are among that group of advanced traders who have been looking for quantified, backtested strategies for trading leveraged ETFs like the ^SSO^ and the ^TZA^, then the good news has arrived. Click here to try Leveraged ETF PowerRatings free for 7 days and see what quantified, high probability trading in leveraged ETFs can do for you.
David Penn is Editor in Chief at TradingMarkets.com.