UNIVERSAL SIGNAL
The lazy man's way to stock market wealth.
 
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How and what to trade?

My signal is based on Nasdaq/NDZ. QQQQ is an ETF (Exchange Traded Fund) that has the 100 largest Nasdaq companies in it. The QQQQ is my main trading vehicle and that's why I refer to it constantly. QLD and QID are so called ultra ETFs funds that based on QQQQ and I also trade them simply because they match QQQQ very well. 

If you are a beginner or want to keep it simple; trade QQQQ or QLD and don't go short until you get familiar with my system. Actually as with any new system; you should follow it on paper for a few months before jumping in to make sure that it fits your trading style. This is why I offer a 3 month trial period.

Once you subscribe to my letter I will provide you with a easy to follow Lazy man's portfolio. This portfolio is great for lazy, beginners or lazy beginners. I recommended that you follow this portfolio especially if you are beginner in trading. 

My system can feel boring, but boring is good. A Turtle will most of the time win a Hare who keeps on running after unattainable results and from a system to system.Most people lose money on trading simply because they are greedy and impatient; don't be one of them. If you have some extra cash and want to gamble use 2 x or 3 x Ultra ETFs. They will give you plenty of excitement and can also be VERY profitable. They can easily move up or down over 20% in one day. 

I will email you with any new signal and if there is no new signal then you will receive an update every weekend. All you have to do is to wait for a new signal. 

As of December 2008 on I am using a new and improved version of my system. This new system is based on my old system, but it's more suitable for these very unpredictable times; it will by default keep your capital safe from any major losses. 

*****

For more experienced traders

If you are more accomplished trader you can create your own portfolio from the symbol list below. The list of trading symbols below is by no means a comprehensive, but it has some of the best trading vehicles for my signal.

If a stock, ETF, fund or an index follows Nasdaq and or QQQQ closely  it can be traded with my system. Below on this page there are many ETFs and stocks that you can check whether they currently follow QQQQ. This takes more skill and your are on your own as to when to sell etc. 

I will only indicate buy and sell signals for QQQQs. You can use them for your trading, but some ETFs may go down more than QQQQ so you must set your own stops for any other ETF you trade with my system. Below there is more on stops etc. 

ETFs are great for trading because they are liquid and you get diversified basket of stocks with one ETF. Also these ultra ETFs, like QLD and QID that duplicate shorting and margin trading and aim to double the result of the index they track can be very profitable, but they are also riskier than QQQQ. QLD and QID can go up or down as much as 6% in one day, so if this kind of volatility is not your cup of tea; stick to QQQQ.

My website has a lot of information; read it all. It will help you to utilize my system for many different ways for your trading.

How to start trading Universal Signal? 

Back test my signal dates against your stocks or ETFs. You can play many different scenarios on paper. After you feel comfortable with the system expand your investment choices and amounts of money you want to invest.

I personally prefer to trade things that I am familiar with; QQQQ, DIA and SPY and their corresponding ultra ETFs. They may not give me the highest returns, but they are fairly safe and stress free trading vehicles. Also they are very liquid, and they match my signal very well. To me it's not worth to loose sleep over a few Dollars here and there. The greater the return, the greater the risk too.

We must be in to win, so we must suffer through this painful whipsaw action and small losses because any rally could turn out to be a major rally. During bear markets take smaller initial positions when betting on a bull rally and during bull markets you must be more careful when shorting. I will indicate secondary buy/sell opportunities if the action continues to the same direction. How to get on to a ongoing signal see here for more info...

The old rule that a conservative trader should go long only doesn’t work anymore. It worked well during the last 30 years while the markets went up and up, but in a true bear market condition, which we have right now we should reverse this kind of thinking and not go long, but short the market by going long on reverse ETFs like QID, DXD and SDS.

During real bear market conditions 80 to 90% of rallies on the upside fail to produce any meaningful returns. (About 10% of these rallies create a whipsaw signal.) During bear markets most money is made by shorting and on a few bear market rallies. And of course the opposite is true for the bull market conditions.

How many ETF/stocks to invest when 100% on the market? 

There are no firm rules when it comes to that. It depends on your experience, wealth, style, and other factors. Some like to put all in one or two positions, some like to diversify more. Do what feels good for you, but it's critical that you trade a few different sectors so that should one of them go down, the others will cover for it and your overall portfolio will not suffer a big loss.

International members

If you trade the stock markets outside US; place an appropriate market order as soon as you get a new signal. In other words, if your stock market is open don't wait for the next day. This way you may get ahead start. 

My system seem to work the best with US ETFs. Ask your broker if you can trade US ETFs or look for ETFs from your own country. Also see the list below of companies that offer ETFs outside US. 

Some people don't want to or can not trade US ETFs, but you can still use my signal to support your trading in your own country. If my signal matches your main index, then you can use it for trading many major stocks in your country. According to a recent study the most international stock markets track each other  more closely every year. The world is becoming one big marketplace. 

This chart shows you how closely most major indexes around the world follow each other. Only the performance varies. FTSE/England. IXIC/Nasdaq. AORD/Australia. N22/Japan. OMXSP/Sweden. GSPTSE/Cananda. BVSP/Brazil.

Do your own comparison; you can find the above chart here...

A list of the major indexes here...

Here you can find the best performing ETFs: Bloomberg.com 

By doing the comparison you will also find out which countries/areas of the world are hot or cold right now. As you can see above; Brazil is hotter than hot. No wonder even Warren Buffet and many other investors are interested in it. But even with Brazil it dips the same time with Nasdaq. With ETFs you can invest easily and safely into many foreign lands.

Signals

I will post all the signals on TimerTrack even though I may think some of them might be whipsaw. On my email to members I will indicate whether I am personally going to follow that signal. This way the subscribers can decide for themselves what they want to do. For example if you have a stock that is just barely in the black, you may want to sell it; even if the signal is whipsaw the weak stocks may drop quite a bit during whipsaws. But if you have a stock that has a good margin of profits, you can let it run a while longer. But of course there is no way to know for sure if a signal is false or if it's a start of a new trend; these whipsaws are times when one ought to be more vigilant. Protecting your capital is your most important task.

What time of the say one should trade?

I conducted a little test: If you would have traded QQQQ the first 9 signals at the open you would have made about 39%, at the close 38% and randomly placing a market order during the day about 38%. As you can see there is very little difference when you trade. So you might as well trade at the open, unless you are a pro who knows how to scalp some extra profits by limit orders. 

How to trade?

When I issue an sell order you can just simply sell all your positions, or if you are experienced trader you can take a look at your charts and if your positions have good profit margins you could let them run a few more days; especially if your are trading your own stock and if the charts indicate that that they still have some upside potential. Some hot sectors may keep going up after I issue a sell signal, so it's a good idea to look the charts before you sell. 

You can also sell 30% or 50% and wait until there is trend line brake before you sell the rest. Using a trailing stop is one way to do it too. There are many ways to use my signal. Even if your stock keeps going up after a sell signal; my signal is a great indicator that the overall market is going to correct and that is a time to be more vigilant. 

Shorting:

Learn to short and trade the inverse ETFs. Some people still think that there is something unethical about shorting, but there is not. On the internet there is a lot of information about shorting. Google and learn about it. We may have a some major corrections in ahead of us, and even if there are no any major corrections, markets will always fluctuate and it's great to get some of the downside profits too. But shorting during a bull market can be risky, so don't do it unless you know what you are doing.

When shorting you can short many different ETF or stocks, but I would recommend that you go only with one or two ETFs. Keep it simple: For example: Short QQQQ, DIA or SPY or go long on one of these ETFs: QID, DXD or SDS which are inverse ultra short funds. Usually I short only with the maximum of 20 to 30% of my capital. Test on paper how different scenarios would have worked out.

You have to be careful with the inverse ETFs (QID, DXD, SDS), because they can be confusing. When you go long on them, you actually short their corresponding ETFs (QQQQ, DIA, SPY).

These two charts show you that you could have shorted DIA because it moves in nearly perfect unison with QQQQ, but with EWZ you should have gone long only. If two ETFs move hand in hand for years it means that it will most likely continue the same way, but they will also uncouple at some point, because trends change. 

 

Even if you trade EWZ long only, you should still go cash during every sell signal. By going cash during sell signals you would have lost some of the profits compared to had you stayed on, but this is the hind sight. In real life one never knows, which sell signal will turn out to be a new long term down trend. 


Also even if your ETF or stock follows QQQQ and my signal well, it may stop following them at any given time as you can see on this AORD chart. It looks pretty much the same as EWZ chart, but in November it dropped like stone with QQQQ. EWZ didn't drop.

Things do change; more examples 2007 bank and financial stocks crashed while the rest of the stocks kept going up, and early 2008 gold stocks stopped following my signal. So stay on top of things, especially if you buy sectors or stocks in your own country that I am not following. But the good news is that as long as you trade according to my signal, you will never lose more than a few percent.

Some worthy trading candidates: 

Symbol links below will give you some idea how these ETFs and stocks track my signal, but to really see and analyze the results on any of them you must go to a charting website where you can pinpoint the actual signal dates on the charts. Yahoo and Bigcharts have Java based interactive charts in which you can easily do that.

Note that the charts below are weekly; my normal trading timeframe is daily. But on the weekly charts it's easier to see the long term correlation to QQQQ or the lack of it. Compare your own stock against this QQQQ weekly chart and if they move in unison, you can trade it with my signals.

Remember that usually the more volatile the trading vehicle is the greater profit potential it has, but also the risk increases by the same rate. The 2 x and 3 x Ultra ETFs can be profitable, but they are not for faint hearted. 

Also note that even if the charts don't seem to correlate, they may still correlate if you go Long only as is the case with the EWZ chart above. 

There are also some dividend paying ETFs that can be a great way to make some extra money. See the list below. 

 

Below 4 sample portfolios and results for 2007 (10 months). 

The results are Long only for the first 4 stocks and short either QQQQ or go Long on Super Short ProFund QID. 

S-QQQQ = Short QQQQ

L-QID = Long QID, which means same as shorting QQQQ.

#1 % #2 % #3 % #4 %
QQQQ 30.7 EWH 44.6 DDM 47.8 QLD 82.9
GLD  27.4 GLD 24.4 QLD 82.9 FXI 82.3
EWT 24 EEM 52.5 EEM 52.5 GDX 58.2
MDY 27.3 GG 68.3 SSO 38.2 EWA 76.9
S-QQQQ 10.3 L-QID 17.2 L-QID 17.2 L-QID 17.2
Total 130 %   207 %   239 %   320 %
Profit $13,000   $20,700   $23,900   $32,000

Above means that if you had $40,000 investment capital and had invested $10,000 on each of the 4 stocks Long only and would have Shorted on QQQQ with $10K you could have made a profit of $13,000 with the portfolio #1

Your $40K capital would have grown to $53K with the portfolio #1. 

... to $63K with the portfolio #2. 

... to $64K with the portfolio #3. 

... to $72K with the portfolio #4. 

The above information points clearly out that 2007 was a bull year (primary trend was up). In some cases Long and Short results were actually less than Long only. But if we get into a bear market the long profits will evaporate and the short profits will increase a great deal because the primary trend will be down. That's why it is important to learn to short or to trade inverse ETFs.

If you had the nerves to trade my signal Long and Short 2007: QLD, QID, GDX and GG the results would have been: 338% or a profit of $33,800 on a $40K investment capital. That's a total of 85% profit.

Long only results for 2007

Symbol %
QLD 61.6
MDY 27.3
QID 52.9
EEM 52.5
EWS 38.2
EWA 54.8
EWH 44.6
EWT 24
DDM 47.8
SSO 38.2
GOOG 41.4
FXI 82.3
MSFT 20.4
EWM 43.8
SLV 33.3
GLD 27.4
GG 68.3
GDX 58.4

 

US Indexes correlation to QQQQ

Dow Jones World Stock Index - $DJW
DOW - $INDU
Nasdaq - $COMPQ
Nasdaq EW - $NDXE
S&P - $SPX
S&P Mid - $MID
S&PEW - $SPXEW
Amex - $XAX
Value Line - $VLE
Russell Small Cap - $RUT
Dow Trans - $TRAN
Wilshire - $WLSH
DOW Utility - $UTIL

International Indexes correlation to QQQQ

Australian - $AORD
Austria - $ATX
Belgium - $INK
Brazil - $WWC
Canada - $CND
Canada - $WPB
Canada - $TSE
China - $CZH
European 100 - $EUR 
Euro 100 - $XEU
French CAC - $CAC
German DAX - $DAX
Hong Kong - $HSI
Italy - $INE
Japan - $JPN
Japan - $NIKK
London FTSE - $FTSE
Malaysia - $DJIMY
Mexico - $MXY
Netherlands - $AEX
Russia - $RTSI
Singapore - $INR
South Korea - $KOSPI
Spain - $INP
Switzerland - $CH30D
Switzerland - $INL
Taiwan - $TWDOW

Tradable ETFs and Stocks (In parenthesis results for 2007)

USA ETFs

QQQQ - Nasdaq 100 stocks. (L 30.7 %) (L/S 40.7 %)
QLD - Ultra ProShares QQQQ. (L 61.6 %) (L/S 82.9 %)
ONEQ - Nasdaq composite. (19.2 %)
DIA - Dow 30. (23.5 %)
DDM - Dow 30 Ulta ProShares (L 47.8 %) (L/S 62.8 %)
SPY - S&P 500 stocks.
SSO - S&P Ultra ProShares. (L 38.2 %) (63.2 %)
MDY - S&P 400 (L 27.3%) (L/S 44.8 %)
IWM - Russell 2000 iShares (29.4 %)
UWM - Ultra Russel 2000 for IWM
VTI - Dow Jones Wilshire 5000
ULPIX - ProFunds Ultra Bull
BGU - 3x Large Cap Bull
TNA - 3x Small Cap Bull

QQQQ based finds/futures

www.profunds.com
www.rydexinvestments.com
www.direxionfunds.com
www.flashfutures.com 

USA Short ETFs

QID - Ultra Short QQQQ. (L= S 17 %) (S = L 52.9 %) (L/S 69.9 %)
PSQ - Short QQQQ.
SDS - Ultra Short Spy. 
DXD - Ultra Short DOW.
MYY - Ultra Short S&P MidCap 400.
TWM - Ultra Short IWM Russel.
RWM - Ultra Short Russell 2000 
TZA - 3x Small Cap Bear

PM ETFs

Gold - GLD (L 27.4 %) (L/S 24.4 %)
Gold - GXD (L 58.4 %) (L/S 86.6 %)
Silver - SLV (L 33.3 %) (L/S 60 %) 
Hui - HUI
Xau - XAU
Gold miners index - GDM

International Long ETFs

Australia - EWA (L 54.8 %)
Austria - EWO
Brazil - EWZ
Belgium - EWK
Canada - EWC
China - FXI (L 82.3 %)
France - EWQ
Germany - EWG
Hong Kong - EWH (L 44.6 %)
India - INP (L 59.4 %)
India - PIN
Italy - EWI
Japan - EWJ
Malaysia - EWM (L 52.5 %)
Mexico - EWW
Netherlands - EWN
Russia - TRF
Russia - RSX
Spain - EWP
Singapore - EWS (L 38.2 %)
South Korea - EWY
Sweden - EWD
Switzerland - EWL
Taiwan - EWT (L 24 %)
UK - EWU
Emerging market - EEM (L 52.5 %)
MSCI EAFE - EFA
Pacific Ex-Japan - EPP


International Short ETFs

China - Ultra Short ProShares - FXP
Japan - Ultra Short ProShares - EWV
Emeging Mkts. UltraShort MSCI - EEV
Short MSCI Emerging Mkts. - EUM
Short MSCI EAFE - EFZ
Ultra Short MSCI EAFE - EFU

Dividend paying ETFs 

PBR
DNH
PID
DEM
DVY

Individual stocks

Goldcorp - GG (L 58.3 %) (L/S 98.4 %)
Nokia - NOK (L 32.4 %)
Microsoft- MSFT (L 22.2 %)
Google - GOOG (L 41.1 %) (L/S 32.2 %)
Semi Cond. - SMH  
IBM - IBM (L 21.6 % (L/S 27.3 %)

*******

ETF links

www.ProShares.com
www.iShares.com
www.profunds.com
www.Powershares.com
www.sectorspdr.com/
www.rydexfunds.com
www.holdrs.com
www.russell.com
www.Streettracks.com
www.CurrencyShares.com
www.vanguard.com
www.wisdomtree.com

If you live outside US; these companies offer ETFs

www.iShares.eu (Canada, Mexico, Germany, France, 
Italy, Austria, Netherlands, Switzerland, UK, Australia, Japan, Hong Kong and Singapore) 
www.ETFSecurities.com 
(UK, France, Italy, Netherlands, Germany)
www.etflyxor.com
(Austria, France, Germany, Hong Kong, Italy, 
Singapore, Spain, Switzerland, UK)
www.etf.ubs.com (Switzerland, France, Germany, UK, Luxemburg) 
www.Seligson.fi (Finland)
www.Xact.se
(Sweden)

International indexes ETF information

Deutsche Börse
Euronext
Borsa Italiana
Amex
Nyse
Nasdaq
OMX Stocholm
London Stock Exchange

Different ETFs around the world

Italy - EQQQ.MI 

More information

Yahoo ETF Center
MSN Money
ETFConnect

 

NOTE: There are risks involved with investing, including possible loss of principal. The results are hypothetical and don't take into account any brokerage fees, dividends, interest or taxes that are associated with trading.

 

 

 

© 2007 - 2009 Timo Yla-Soininmaki