You’ve gotta love the new MZZ Double Short ETF. Trading this Exchange-Traded Fund online is going to be fun. The trading guy really hasn’t seen any rules yet on trading MZZ, Ultra-short Mid-cap 400 in an IRA. Trading is as normal in an online trading account. It hasn’t been shortable yet though. Borrowed from Proshares description, ‘The UltraShort MidCap400 seeks daily investment results, before fees and expenses, that correspond to twice (200%) the inverse (opposite) of the daily performance of the S&P MidCap 400 Index.’ We’re not going to worry about that though because patterns are the trading guy’s only concern. Lets look at a recent trade in MZZ.

A technical pattern emerged in this ETF on Friday and was entered on the uptrend. Note the three last pivots followed by the higher high. A stop was set below the all-time low as this is one volatile equity. That’s the kind we like to trade! Risk, R was set accordingly, and the target was set at 1R for this first time trading the MZZ. 69.65 was the low and the trigger hit over 71.65. 73.65 was the target. Note that this pattern the BL2, Bull Long 2, is opposite the Bear Short 2. With the BL2 the trader waits for a higher low pivot followed by a higher high candlestick, for entry.

Note how the stock really didn’t do much the first day closing down from entry. Stops would be raised daily and placed under the low for the day with a .16 cushion to avoid shakeouts. Today that stop was missed by a penny. MZZ rocked after that and the trade was exited, 1/2 near 74 and the rest near the close.

It will be interesting to see if MZZ trades to it’s trendline quickly, as this is also a FBS2. Those stock chart patterns can head higher fast. The MVV, Ultra Mid-cap 400 is the long version of MZZ. I’m sure trading that ETF will be occur soon at Online Stock Trading.

The range on the XAU, which tracks a selection of gold and silver stocks, bounced off that trendline support that was shown in this chart. When a direction is finally established, hold on to the stocks in that sector, as they’ll probably take a nice ride. XAU over 150 resistance should clear the way for higher stock prices. A break of the trendline support would be a fourth test and breakdown which would make the short sellers happy. You can see the energy building on this weekly XAU chart of the gold sector.

This GDX chart shows a nice gap higher. Unfortuantely the last GDX trade was closed out.

GLG, Glamis Gold Ltd. and AEM, Agnico-Eagle Mines Ltd. are two nice gold stock traders. LIHRY, Lihir Gold Ltd. can be added to that list too.