SOME OF MY FAVORITE ETFS

Unfortunately, many of the specific sectors that I'd like to participate in, like perhaps the defensive utilities, don't offer ETFs that are leveraged and still have volume that is acceptable. So many of these are broader ETFs. I view the market as risk on, no matter what trade you are in, whether leveraged or not. After all, who would have considered the derivative products in housing which nearly collapsed our economy, to be speculative and dangerous? They were backed by real, tangible assets, but they were very risky. So when I enter a trade, I want to get the maximum return for the risk I'm taking. As far as the potential increased downside, risk management is essential. There's no reason you can't take high BETA trades with appropriate rsk management, diversification (but no over divisified) and propper position sizing to reflect the risk at your entry.

For those of you using StockFinder, I have an indicator I'm glad to share with you which will tell you what the maximum surprise gap against a position has been over the year. Gaps are the hardest thing to deal with in risk management as you can set a reasonable stop, but have no way to protect your risk position if that stop is gapped thrpugh on the open; so this indicator will give you an idea of what is possible. So long as your position size accounts for the worst case scenario, I personally have no problem trading leveraged positions.

There also is the ETF 1 day performance issue to consider. I have traded many ETFs and have had no significant problems other then when the NYSE specialist decides to open a market. I had a very profitable position in SKF several years back see quite a bit of the profit disappear as the specialist didn't open SKF for trading until 10:30 a.m.-that's their right and when you trade an NYSE issue, you have to be aware of that.

To deal with the 1-day ETF problem, which some people have had a problem with, I haven't personally, you can look at ETFs as a swing trade or shorter trade vehicle. Again, I personally don't have a problem holding them for longer periods.

Here are some of my favorite ETFs right now. ETFs are typically most useful when they are trending, especially leveraged ETFs, choppy markets are not kind to leveraged ETFs for the most part. So you can always wait for a breakout in the respective ETFs. If we are to get a substantial move, missing a few percent by buying before a breakout is really not a big deal.

 DUG-Ultra Short Oil & GAS-(ERY can be used as well). You'll notice a common theme among these has been a bullish descending wedge, followed by a period of lateral basing. Typically the price target implications of a descending wedge is "Wedges retrace their base" so in this case, the base would be around $70.00. RSI is positively divergent, 3C is as well, especially in the lateral base building area.

 DXD-UltraShort the Dow-30.

 DXD daily 3C in a leading positive divergence.

 EDZ (Short Emerging Markets 3x) A positive RSI and the target zone of the wedge near $60.

 EDZ and 3C both in leading positive divergences.

 FAZ Financial Bear 3X leveraged.

 FAZ daily 3C leading positive divergence near the target zone.

GLL- UltraShort Gold. This I consider a more recent addition and probably a shorter term trade based on my Gold analysis for a deep pulback and a potential buying opportunity there.

 GLL's very recent MoneyStream Leading positive divergence.

 GLL's daily 3C chart.

 Here's the 60 min GLL chart as I indicated, this is a more recent trade acting better.

 SCO UltraShort DJ-UBS Crude. Just look at the recent volume here.

 SCO's daily MS leading positive divergence.

 SCO 60 min 3C divergence right at the exit from the wedge,

 SMN UltraShort Basic Materials-this is one of the more specialized ETFs that I wish there were more of with decent volume, Basic Materials should see a big drop judging by the recent manufacturing numbers that are close to decline.

 SMN breakout area and positive RSI-again, the target implied here is around $45, nearly 300%

 TZA has seen a lot of action recently-Small Cap Bear 3x leveraged. Just be aware if you are in this position, there's a lot of correlation with something like a short position in the Russell 2000. For risk management, you should consider treating the risk between two similar trades as one.

 TZA daily 3C in a leading positive divergence through the basing area.

 TZA showing a similar positive divergence in MoneyStream.

 ZSL-UltraShort Silver. While silver prices are depressed compared to gold, the Comex sending 5 margin hikes in silver suggests there's an agenda, perhaps by the Fed. The CME's explanation of volatility/risk and why they hiked margin requirements doesn't hold any water when they recently lowered ES (S&P E-mini contracts) during a period of increased volatility. So I say, "Don't fight the Fed" on this one, or at least not just yet.

And ZSL's recent leading positive divergence in MoneyStream.

I do like these ETFs if I need quick, broad exposure to a sector and haven't had time to set up a pure equity short, which in most cases I prefer for a number of reasons. They are also helpful if you do not have the ability to go short with your brokerage.