Trading ETF’s: LABU and SOXL
Having your money earn compound interest should be everyone's goal. The stock market has always been a great way to do that and right now we are going to look at swing trading two leveraged ETF’s. LABU, and SOXL being my favorite two leveraged ETFs to trade let us look at their current chart and opportunities they present us. If you are looking for overall investing advice that does not involve looking at charts and doing research, check out my investing money for beginner's post. Right now, only 35% of my portfolio is used for swing trading. The rest is in 4 different mutual funds. Swing trading leveraged ETFs present opportunities for big swing trades and safety compared to trading individual stocks, check out my book and to see why after 20 years this is the only way I trade.
The charts we are going to look at are in XBI and SMH, they are the non-leveraged versions of LABU and SOXL. We want to look at these charts when trading the leveraged versions.
XBI is down about 20% from its high of $174.79 in February and has been creating a small upward channel up from its low from that pullback of $118.23. If XBI test its previous high that would be a 27% increase from its current price, giving LABU roughly a 145% increase on LABUs chart. I will only trade anything or invest in anything if it's over the 200sma, to me that means the position is healthy. LABU has been trading right above its 200sma after being under it for a short amount of time. Right now, I am watching this and looking for it to grind up that trend line for the time being until it retests the previous highs. This could take the rest of the year and present a lot of swing trading opportunities or just an opportunity to buy and hold until it does touch the highs again. Of course, like everything there is a possibility for it to touch the lows and that would be a bug dip in LABU, but trading is all about managing your position and keep your average low until you lock in gains. Worst case scenario you are holding a biotech ETF for a long time, but it’s a growth and speculative sector to be in as we will always need these cures for disease and other medical issues.
SMH has been producing great trading opportunities over the last 5 months giving SOXL multiple 30% gain swings within that time frame. Those are great gains to compound. Right now, the chart is looking like it has broken out of that sideways trading pattern above the $257 area, fell back to that breakout area and may run up to new highs. Mental profit taking on this breakout for me would take place at $275 and $300. That would give SMH a 5-15% increase from here and 3x those numbers for SOXL. Considering chips and technology will be growing for years to come this could be a good long hold or a trade to those levels. Of Course, it could pullback or and test lows, and worst-case scenario you're managing a trade in a semiconductor ETF for a while.
Keep your trading watchlist low with leveraged ETFs and focus on making profit at your own pace. Getting rich overnight is for the lucky, making millions over years of compound interest are for those that will take advantage of opportunities and play it safe at the same time.
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