Short Term Trading and the Race to the 200-Day
Yesterday the FXI crossed above the 200-day moving average. The Q’s are not far behind. After a year of shorting ETFs, we may actually see some buy signals soon!
Until then though, most of the major ETFs are below the 200-day and are triggering overbought signals. Ideally you want to continue being short under the 200-day. It’s the reason why so many Daily Battle Plan subscribers have had success since early last year. Eventually though a bull market will again appear and how do you protect yourself while you’re short as the market is approaching its 200-day ma?
There are three ways to do this. Smaller position size, options protection, and credit spreads each lessen the risk in case the market continues at this current upward pace. In the long run I’m sure we’d all agree its healthier for the next bull market to emerge, but we want to protect our short trades in the meantime.
The above three ways do a good job of doing this and I’ll cover each over the next few trading days.
Special Announcement: We will be launching our 6th TradingMarkets Swing Trading College in early May. The Swing Trading College is an all encompassing 14 week trading course with special focus on ETFs and it’s always very popular. If you’d like to attend my presentation, I’ll be doing it online today at 4:30 pm ET.
Call 1 213-955-5858 ext 1 if you would like to attend the presentation or if you would like to receive a copy of the recording.
Larry Connors is CEO and Founder of TradingMarkets.com and Connors Research.