Exchange-Traded Funds (ETF) MGCIBDMUG Presentation 1/17/15

What is an ETF? An exchange traded fund is a basket of stocks, or an investment fund that tracks an underlying index and trades as a single equity. Created around every conceivable types of index… Market Indices (S&P 500, NASDAQ 100, etc.) Market Sectors (Health Care, Oil & Gas, etc.) Stock types (value, growth, etc.) Specialty, International, Real Estate, Commodities, Currencies, etc.

Benefits ETFs typically involve lower operating costs than traditional mutual funds. Provides diversity within each share. Earn dividends paid by the underlying stocks. Tax benefits (don’t pay until you close out the position. Undergo continuous pricing unlike mutual funds that wait till end of day. ETF’s are immediately disposable. Reduce investor research time. Allows you to short baskets of stocks (inverse ETFs).

Where to Find and Assess ETFs Look at fund family websites: Claymore, iShares, PowerShares, ProShares, SPDRS, Schwab… Screen, Research, and Compare www.investors.com www.schwab.com www.nasdaq.com www.finviz.com www.barchart.com

IBD ETF Strategy HOW IT WORKS Buy a market Index ETF (QQQ was used in the study) immediately after a new uptrend is announced in Market Pulse and employ these simple allocation rules: Use Market Direction to adjust Confirmed Uptrend – Buy and Hold 100% Uptrend Under Pressure – Reduce to 50% Market in Correction – Pull out. 0% For Market in Correction, consider Inverse ETFs (Note: This is not part of IBD Strategy)

IBD Exportable Reports ETF Center: 1-Week Winners and Losers Description: The exchange traded funds listed below are the top price percentage gainers over the past week. Symbol Company Name Current Price Price Change % Price Chg (1 Wk) Volume (000) Volume % Chg UVXY Proshrs Ultra Vix Sht Tm 32.60 1.83 36.52 25006 72 JNUG Direxion Dly Jr Gld Bull 38.83 4.58 24.14 3430 7 NUGT Direxion Gld Mnr Bull 3X 16.96 2.40 23.89 20716 19 RUSS Direxion Russia Bear 3X 26.18 2.16 22.22 1004 3 VIXY Proshrs Vix St Futures 24.06 0.72 17.48 1094 -8 VXX Ipath Sp Vix St Term Fut 36.13 1.01 17.42 61871 53 ERY Direxion Energy Bear 3X 26.38 0.94 17.3 3808 2 FAZ Direxion Finl Bear 3X 14.65 0.46 14.01 5877 105 SOXS Direxion Semicon Bear 3X 15.14 0.35 13.32 197 -26 BOIL Proshrs Ultra Bloom Natg 17.90 -1.21 12.58 504 56 SQQQ Proshrs Ultpro St Qqq 32.94 1.24 11.21 6134 40 DUG Proshrs Ultsht Oil & Gas 62.06 1.62 11.1 281 -24 SPXS Direxion Dly Sp5 Bear 3x 22.56 0.63 10.7 7426 200 SPXU Proshrs Ultpro St Sp 500 41.61 1.11 10.66 7764 80 TZA Direxion Sc Bear 3X Shrs 13.48 0.70 10.4 20773 34 SRTY Proshrs Ultpro St R 2000 34.62 1.73 667 -14 SDOW Proshrs Ultpro St Dow 30 22.20 0.39 10.01 1656 95 SCO Proshrs Ultsht Blom Crud 99.74 8.10 9.98 1893 24 USLV Vs 3X Silver 23.32 0.10 9.68 561 55 GDXJ Market Vect Jr Gld Mine 28.58 1.33 8.59 20514 -6 Screen results as of 4:01 PM Eastern, Thursday, January 15, 2015

ETF Trading Strategies Index and Sector Strategies Stay aware of market swings due to economic and earnings data, geopolitical events, and national/global news that impact financial markets Stay tuned to which sectors and industry groups are leading and which are showing signs of weakness

Using Charts to Buy and Sell ETFs Bullish: Strongly Trending The 20 MA is above the 50 MA. Both the 20 MA and 50 MA are rising The distance between the 20 MA and 50 MA is large and getting larger Pullbacks reach only to 20 MA or at most between 20 MA and 50 MA

Using Charts to Buy and Sell ETFs Bullish: Weakly Trending The 20 MA is mostly (but not always) above the 50 MA. Both the 50 MA is rising, but the 20 MA is fluctuating (though mostly rising) The distance between the 20 MA and 50 MA changes frequently Pullbacks reach 50 MA, sometimes beyond but only briefly

Using Charts to Buy and Sell ETFs Bearish: Strongly Trending The 20 MA is below the 50 MA. Both the 20 MA and 50 MA are falling The distance between the 20 MA and 50 MA is large and getting larger Rallies reach only to 20 MA or at most between 20 MA and 50 MA

Using Charts to Buy and Sell ETFs Bearish: Weakly Trending The 20 MA is mostly (but not always) below the 50 MA. The 50 MA is falling, but the 20 MA is fluctuating (though mostly falling) The distance between the 20 MA and 50 MA changes frequently Rallies reach only to 50 MA, sometimes beyond but only briefly

Using Charts to Buy and Sell ETFs Range Bound The 20 MA spends as much time above as below the 50 MA. The 50 MA is mostly flat, while the 20 MA varies from rising to falling The distance between the 20 MA and 50 MA varies greatly