Monday, February 06, 2012

This chart trades the Direxion Small Cap Bear  2.0X Fund (DXRSX) and AMD, a volatile hitech stock

Three Strategies Shown

(1)The upper "Tot Return"chart shows a yellow line. This is FastTrack weekly "hedging" model. (2) The center "adj return" chart shows relative strength trading between red and green lines producing the red/green composite line.(3) The lowest "ad2 return" chart shows simple 50-day moving average timing.

Direxion Timing

The lowest Ad2 chart illustrates trading AMD to money market using a moving average. There are 8 trades/year producing an annualized return of 24.99%. The green segments are money market return.

Relative Strength Trading

The "ADJ" chart shows trading back and forth between the red and green lines alternating 100% long/short holdings This strategy has a 25.33% annualized return

Momemtum Trading

The upper "Tot Return" chart yellow line shows  the investors dream. . . high return with relatively low risk. Trades are done weekly. AMD and DXRSX are held in varying percentages adjusted weekly by the FastTrack Momentum Model.

FastTrack tells you:
*  Which funds to Own.
*  When to Trade.
*  How much to invest.

Click for more fund trading strategies.

Timing Direxion's
Junk Bond Fund

At first glance PDHYX red line fares poorly with respect to the green line, the average junk bond fund.  However, don't be misled by  low rankings for this fund . . .  PDHYX is for trading, not buy-and-holding.

Junk bonds have always provided an excellent target for moving average timing. Direxion allows trading PDHYX  daily if you wish. 

The center, yellow, 10-Day moving average histogram generates green tic marks to show where to move to money market, and red tics to show where to move back to PDHYX.

The impact of trading PDHYX to money market is shown in the red/green composite line in the lower chart . . .  a low risk 6.39% annualized return. This is a little lower than the return of the average junk bond funds, but with MUCH less risk.

Special Note about Bear Funds

All bear funds have a lot of overhead. You should be aware that for periods than a few days, a bear fund may show a loss even when the underlying index has also lost money. Using bear funds for any purpose is risky investing and unsuitable for buy and hold strategies. These strategies are NOT diversified, and at points these strategies will lose money when both issues go down at the same time.