Trading ETFs on Weekly Charts

Firstly, I’m surprised this forum isn’t more active.

ETFs can be a means for investors to make bets on the various assets classes and themes and to do so without the hassles of shorting. (Many stocks are hard to borrow, and their borrow fees can be abusive.) Furthermore, betting on a whole asset class, rather than individual members of the class, means that a lot of tedious, fundamentalist work can be avoided.

There are about 3,500 ETFs. But most are redundant to each other and don’t need to be tracked. Also, there is this problem. “How many charts can one look at before eyes glaze over and good decisions are no longer being made?” Fortunately, lists of “Key Market” ETFs an be found at Seeking Alpha, and those are the ones I’ll mostly focus on in this thread.

Next problem. Most would-be investors have small money, small time, and small skills, plus, nearly everyone and their cousin tells them this lie. "This investing/trading stuff is too risky and too complicated to do one one’s own. Hence, you need to buy the advice of “experts”. I disagree, as does an investor who goes by the handle of Quill who offers his own method of making investing/trading decisions that he lays out in other forums. What I want to explore here is an even simpler version that focuses the intermediate price moves as are revealed in weekly charts.


Our dear forum hosts, the Motley Fools, make scant effort to trade Currencies, Commodities, Countries, or Credit, or what I call the Four C’s. Instead, they focus on a fifth C, individual Companies. The hassle with trading the Four C’s is that the means to access many of them through other than futures contracts have low trading volumes, like sugar or copper whose ETFs are traded on what amounts to an “appointments only basis.” But the price moves can be sustained, and the profits, fabulous. E.g., this is the recent action in copper.

The Buy/Sell rules are obvious, right? The bottom panel compares the ETF being charted with the price action in the broad market.

Next comes another hassle. “Yesterday’s market can’t be bought.” Saying what “coulda, shoulda” been done is a waste of time. What matters is what a tradable is going to do next. That means charts have to be looked at on a frequent and disciplined basis. Fortunately, if one is using weekly charts --and a limited number of them at that-- and trying to trade on only an End of Day basis using fractional shares --which only permit market orders-- then it should be possible to keep one’s investing activities confined to a few minutes of one’s evening time.

That, anyhow, is the goal with this demo project, to use a few minutes, and a few bucks, to make a few bets that might pay off a bit better than lending the money to our dear government by buying their T-bills.