Stock Chart of the Day: SPXU

Almost every swing trader watches SPY for market direction and for swing trades.  However, you need to load up on SPY in order to make money off it’s moves.  For that reason, I like to trade leveraged ETFs, which give us more volatility, and volatility is what we want as swing traders.

Recently I went short SPY via inverse ETF SPXU.  You go long this inverse ETF, which has the effect of shorting SPY.

Let’s take a look at the chart.  The stock has made a nice run right up to the 50 dma after being severely overbought.  RSI has picked up, which leads me to believe it can break the 50 dma and hit at least one of the two targets above, the early August breakout at $48 or the pivot high at $51.

Note that this is the exact inverse of what SPY is doing.  So our analysis of this chart tells us that SPY still has room to pullback.  I have set my initial target at $48, where I will take half off and move my stop up to entry level.  My next target is $51.

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