Last Friday, the ^TNA^ closed with a Leveraged ETF PowerRating of 10.
The same was true of other leveraged ETFs, especially in the technology sector, where funds like the ^ROM^ and the ^USD^ actually earned Leveraged ETF PowerRatings of 10 on both Thursday and Friday.
If you were a PowerRatings trader, it was that kind of day: leveraged ETFs with already-high ETF PowerRatings were earning upgrades to the highest levels. 8s were being upgraded to 9s. 9s were being upgraded to 10s.
Unfortunately for many traders, the end of last week was also pure chaos. From the Greek debt crisis to Goldman Sachs in the crosshairs to the massive sell-off and 1,000 point intraday drop, there was more than enough news to distract even the most disciplined traders.
But those traders who stuck to their game, especially those short term traders who trade leveraged ETF PowerRatings, were able to lock in impressive gains in many instances. That TNA I mentioned at the outset closed at 47.65 after that nasty sell-off on Friday. TNA is trading at well over 60 less than five days later. ROM? Averaging the two 10-days in ROM on Thursday and Friday, this 2x leveraged ETF is up more than 11% after a week.
The same is true about a wide variety of leveraged ETFs that earned PowerRatings upgrades late last week.
These kinds of returns do not happen every day. And neither do 1,000 intraday sell-offs. But what does happen with surprising frequency is that markets – including markets for leveraged ETFs – develop edges that short term traders can take advantage of in a consistent fashion. When those edges are modest, gains, while consistent, are similarly modest. And when those edges are huge, as they were when markets plunged late last week and the number of stocks, ETFs and leveraged ETFs earning top PowerRatings skyrocketed, the gains that follow can also be substantial.
Leveraged PowerRatings are a tool to help traders spot those edges. By rating leveraged ETFs on a scale of 1 to 10, PowerRatings show traders which leveraged funds have the historical edges on their side and are most likely to make significant gains in the short term. With accuracy rates of 79% for the highest rated ETFs – based on quantified backtesting involving thousands of simulated trades – leveraged PowerRatings offer traders a way to buy market weakness and sell market strength the way professional traders and money managers have done successfully for decades.
If you’re looking for ways to trade leveraged ETFs in the short-term, then click here to give leveraged ETF PowerRatings a try for a week for free.
David Penn is Editor in Chief at TradingMarkets.com.