The short term trend of the S&P 500 turned up this week and with the long term trend also being up, this means that we are in a bull market:
This, in turn, means that for me it is time to get out of bonds and to slowly make some bullish bets. And getting out of bonds is what I did. I sold my previous holding, TLT:
Not a huge gain here, but better than holding cash, I think. Anyway, because we are now in a bull market, here are some bullish ideas. The chart below shows the Canadian ETF, XTR.to, which is a monthly income fund:
This ETF, being a mixture of Canadian government bonds and Canadian dividend paying stocks, is quite conservative, which may pay off if this short-term uptrend changes course - something that could easily happen.
Besides going long a stock or ETF, another way to make a bullish bet is to short an inverse ETF. Based on thousands of hours of chart analysis, I have come to the conclusion that Ultrashort ETFs tend to inexorably drift towards a price a zero, although never able to get there, thanks to reverse splits.
I've seen many other blogs complain about Ultra ETFs, but few take any action. It is possible to short sell these ETFs and profit from their decline.
The amount of money that one can make shorting is not limited to your initial investment - you can always add to your position, pyramiding on the way down. And no, it is not possible to lose an unlimited amount of money on a short if you are smart and use stops.
One final benefit of shorting ETFs is that you get paid the expenses. All ETFs have fees or a management expense ratio (MER), which is deducted from the net asset value of the fund each month. If you are short the ETF, you profit from this.
I have decided that for Monday at the open, I will short VXX, which was mentioned last week. I will risk 2% of my capital on this trade.
