One of the key technical tools that I use to select the best performing ETFs and stocks is the relative performance analysis. Two of my previous trading lessons How To Identify Sector ETFs Before They Make Big Moves and Building A ETF Portfolio For 2016 discuss some examples of how I use this analysis.
For investors the Viper ETF Report looks to go long when there are signs from the RS analysis that a bottom is in place. Longs are held until there are signs that the weekly trend is changing. For traders a different strategy is used. On Wednesday traders closed out the remaining long position in CBOE Holdings (CBOE).
The stock was recommended on Wednesday April 5th as the previous Friday (line 1) it had turned up on my weekly Viper Hot Stocks buy list. The relative performance had completed its bottom by moving above the resistance at line a. As I commented at the time
“The daily chart indicates that the trading range since February is going to be completed. The 20-day EMA is at $79.84 with monthly pivot support at $80.02. The daily indicators are positive as the RS has already broken out to the upside. Traders go 50% long at $80.95 or better and 50% long at $80.36 with a stop at $76.86 (risk of 4.7%).”
Before the end of the week CBOE has dropped to a low of $79.88 and the next week it had closed higher. By early May it had reached my initial upside target and 50% long of the long position from an average price of $80.75 was sold at $87.66 for an 8.5% profit. The stop was then raised to $86.66 to lock in a profit on the remaining position.
CBOE pulled back to the rising 20 day EMA on June 22nd and triggered a daily doji buy signal on June 26th signaling another move to the upside. After the 4th of the July 4th holiday I commented “No signs yet of top from the daily studies but the monthly pivot resistance is at $93.44. Traders are 50% long at an average price of $80.75 - sell at $92.89 or better. On July 5th it traded as high as $93.55 as longs were sold for a 15% profit.
It was down 1% on Thursday but there are still no signs yet of a top but though we may have given up another 2-3% of possible profits it is much better to be selling when others are buying even if it is still a market leader. Even the hottest stocks can drop 2-4% before their market leadership is questioned.
Both the Viper ETF Report and the Viper Hot Stock Reports are sent out twice each week with very specific entry and exit prices. The service are only $34.95 per month and both include regular Trading Lessons.