iQ 2x ETF Market Timing Model
A SMART WAY TO OWN LEVERAGED ETFs!
Leveraged ETFs can offer serious upside, but they’re not typically built for long-term holding. The iQUANT.pro 2x ETF Market Timing Model is designed to help investors take advantage of short- to medium-term trends in 2x leveraged ETFs—using a disciplined, technical, and rules-based approach that evaluates positions monthly.
How Does the Model Work?
The model tracks four leveraged index ETFs, each representing 25% of the total portfolio. Each ETF is represented by its own technical set of rules that determines a monthly buy or sell signal. When a buy signal is triggered, the model holds the ETF for the month and reassesses on the first trading day of the next month. If a sell signal is triggered, that 25% allocation moves to a defensive position—such as a money market fund or short-term Treasury ETF (we use BIL)—until the next reconstitution.
By sticking to this systematic approach, the model aims to capture opportunities while maintaining discipline around re-entry and exit points.
Here are the technical indicators utilized for each leveraged index ETF:
ProShares Ultra S&P 500 (SSO)
Entry: 10- versus 25-day price (simple moving average)
Exit: 25-day McGinley Dynamic Indicator
ProShares Ultra QQQ Trust (QLD)
Entry: Price versus 2-month high
Exit: 3-Day Money Flow Index is above 75
ProShares Ultra Russell 2000 (UWM)
Entry: 14-day Stochastic Oscillator
Exit: Price versus 500 day simple moving average
ProShares Ultra MidCap 400 (MVV)
Entry: 14-day Stochastic Oscillator
Exit: Fast 14-day Stochastic Oscillator | slow 14-day stochastic oscillator
Potential Benefits
The iQ 2x ETF Market Timing Model may provide the following benefits:
Potential for Enhanced Returns: Leveraged ETF market timing strategies may aim to magnify the returns of the underlying index or asset class, potentially leading to higher gains during favorable market conditions.
Flexibility and Agility: Market timing strategies using leveraged ETFs can offer the flexibility to adjust exposure quickly in response to changing market trends and economic conditions.
Diversification: By exposing investors to a variety of style boxes and indices through leveraged ETF market timing strategies, advisors can diversify their portfolios and possibly take advantage of a variety of market opportunities.
ETF market timing strategies involve frequent buying and selling of ETFs to profit from short-term price movements. Despite its appeal, market timing carries risks, significant trading costs, and tax implications. Successful market timing is challenging, and the strategies may not deliver desired returns. Leveraged ETFs seek amplified daily returns based on an underlying index or asset. However, they are not suitable for all investors due to inherent risks. Over longer periods, leveraged ETFs' performance may deviate from daily objectives.