Question: Swing Trading Mutual Funds

Discussion in 'Technical Analysis' started by hoodooman, Mar 20, 2004.

  1. Here is a hypothetical question.

    You have three sector mutuals funds. All are simultaneously giving you a strong slow stochastic buy signal. One is on the 100 ema and supported by it. The second fund is on the 200 ema and supported by it. The third is on the 300 ema and supported by it. In each case, the funds appear to be in an uptrend where the 100ema>200ema>300ema.

    Which one of these funds would you buy strictly from technical analysis and why?

    best regards an thanks for any replies.
  2. gnome


    Not enough info for a good answer. However, presuming "today's the day" for a buy in all 3 cases, pick any one then switch to the one with higher Relative Strenght in coming days.
  3. Gnome

    Thanks for the reply. What other information would you require. And exactly what do you mean by relative strength in this case.
  4. gnome


    I'd have to see the charts. One could have had high relative strength then dipped to the 100. Another could have been catatonic and dipped to the 300 because it wasn't very far away.

    Relative Strength, RS, is the performance of one versus another from a reference point.

    When faced with this decision, you want to go with either the "strong one which resisted the decline best" = High RS, or the one that is "most oversold" = Biggest snap back. You don't know which will be better until the move is in progress. Anything in-between is disregarded for now.

  5. Hi Gnome
    I thought you might reply that the one that resisted the drop had the strongest relative strength. Actually. they all started pretty much alike but the 300 ema support doesn't really exist. Two that I follow have broken down below the 300 ema.
    regards and thanks again for the reply.
  6. based on the hypothetical situation you had posted, i would go with the mutual fund with the highest resistance away from the support. i know this is a indirect answer to your question, but this is my answer because all three are in a uptrend with a support below them.

    the greater the distance between the support and resistance, the greater the profit potential. So go with the trade with the best Reward.


    P.S. i wouldn't go trading mutual funds, use your system with stocks and you don't have to deal with the chance of getting hit with fees and other minutia. even if you can change monies from one mutual fund to another, commission free. realizing the profit most likely would mean getting hit with charges. why bother. if your system works, it works.
  7. He could trade Rydex or Profunds

  8. Thanks for the replies. Rydex funds are "built" for trading and IMHO my system seems to be much more reliable with mutual funds than with stocks. Interesting answers. Thanks again.
  9. point taken, i'm totally ignorant of rydex/profund mutual funds.
  10. They have both bull and bear funds in the indexes and also 2 for 1 leveraged funds that you can trade twice a day. When Greenspan starts pushing the rates up, you can short the treasury bonds by buying RYJUX. This is a great play.
    #10     Mar 22, 2004