A lot of monetary gain can be made through short term trades if you are certain to buy the stock near its annual low and if you sell it while you still have a profit. Making 10% on each each trade ten times each year will net you a 100% gain on your money. You just have to be vigilant about where the highs and lows are for each stock.
I will be tracking the prices of certain ETF stocks below intermittently. I prefer to trade ETFs rather than individual stocks because too much can go wrong with individual companies. For example, ATPG, an oil and gas company, dropped 72% in one day on August 10, 2012 because of bankruptcy rumors. The company had been around for years, they had plenty of assets, and they had new drilling jobs. None of this mattered the day they dropped 72%.
On the other hand, ETFs are tied mostly to the macro trend of stocks in general or a particular sector. For example, TLT is a 20 year bond ETF that can increase in price more than 20% if people have no faith in stocks at the time. ERX, an oil ETF can go up 30-50% if you buy it at the bottom. The same thing is true of XIV, the reverse volatility index that goes up when market conditions are calm or bullish.
An interesting relationship to note below is the relationship of FXE
, the euro, and TLT, the bonds ETF. When FXE is at an intermediate high as marked in yellow below, it is a sign that stocks may be on the verge of pulling back while TLT could be going up. The stock market seems to be bullish when the euro is stronger than the dollar as shown in FXE. So, when FXE is advancing, a good stock to buy is NUGT, and the gains are shown below in green. When FXE is declining, TLT may be worthwhile buying if the downturn is a big one.
In January of 2013, a major paradigm shift occurred where gold and gold miners were no longer linked to a rise in FXE. There seems to be a current cap on gold at around $1200 per ounce, and gold miners are in worse shape as evidenced by the low price of NUGT below. It will be best to avoid gold and gold miners in the future because the market seems to sense that we will be in a low inflation economy for quite some time.
Watch the following stocks below closely to know how to trade.
FXE The euro ETF.
TVIX Volatility index. Note: 1-10 reverse split was done on December 21, 2012.
TVIX and NUGT *** Both did reverse splits again in 2013. Don't own these stocks!
NUGT Gold miners. **Reverse split.
As of June 21, 2013, I am changing the table below to an intermittent entry rather than weekly because the table has become too long. Reporting on an intermittent basis will also show greater price changes in the stocks, and the trends may be more noticeable and thereby easier to trade.