August 19, 2017

Archives for December 2010

Short-Term High-Probability, Mean-Reversion Indicator. Overbought Readings Continue to Increase.

A few days ago I mentioned the potential for a trade in the Materials sector (XLB) as it had pushed into a "very overbought" extreme. Today, I finally placed the trade in my High-Probability, Mean-Reversion strategy as XLB hit a reading of 99.3. Again, I am taking advantage of a short-term overbought extreme in the ETF and if we see a pullback over the next 1-3 days the trade should be quite successful. Of course, I will be watching the trade closely and will keep the stop-loss at a reasonable level just in case XLB continues to push higher. I am still sticking with what I stated last week, going back over the last seven years if you purchased QQQQ on the 8th trading day of January and held until the end of the month, you would have … [Read more...]

Short-Term High-Probability, Mean-Reversion Indicator. Materials Sector (XLB) Moves Further Into Overbought Territory.

I am still sitting on my hands waiting to take a position. I have mentioned a few key statistics over the past few days and I expect to see these stats come to fruition as we enter 2011. Yesterday, I mentioned how a position in XLB looked possible. As my subscribers know by now, no position was taken, but that does not mean that I am not still watching the ETF closely for a potential opportunity. Subscribers, you should still be on the lookout for a possible trade alert. The market remains stagnant as volume and volatility continue to be minimal. This is no surprise, volume and volatility are typically quite low during the last week of the year. If you haven’t already, don’t forget to sign-up for my Free 30-day trial. Also, for … [Read more...]

Short-Term High-Probability, Mean-Reversion Indicator. Materials Sector Overbought.

I hope everyone had a wonderful extended holiday. As we enter the last week of 2010, the Materials sector (XLB) has pushed into a short-term overbought state. Typically, the last week of the year is bullish and I would expect to see much of the same this week. When the stock market has advanced 10% higher headed into the final week of the yea and 3% higher during the final month the S&P 500 is positive 92% (11 out of 12%) of the time. Going back to the Materials sector (XLB), if the ETF opens up tomorrow there could be a trade in the near future. So, subscribers, be on the lookout for a possible alert tomorrow. As I stated last week, going back over the last seven years if you purchased QQQQ on the 8th trading day of January … [Read more...]

Short-Term High-Probability, Mean-Reversion Indicator. USO Trade Monday?

Yesterday, I mentioned how several of the ETFs that I follow in the High-Probability, Mean-Reversion strategy had moved into a short-term "very overbought" extreme. USO and XLE continued to push further into an extreme state today which will most likely lead to a short-term position in the strategies early next week. If one or both open the week higher I will most likely send out a real-time alert to my loyal subscribers. So, if you are a subscriber stay tuned early next week. The S&P 500 (SPY) has now advanced 13 out of the past 15 trading days.  This is the first time since 1971 the market has seen a streak like this extend into December.  The other dates were 12/8/59, 12/2/68, 12/7/70 and 12/15/71.  The first two led to almost … [Read more...]

Short-Term High-Probability, Mean-Reversion Indicator. New Extremes to End 2010.

December has been another good month for the High-Probability, Mean-Reversion strategy. So far, the options strategy is up 8.7% for the month after a 3.7% gain in November (including commissions). Furthermore, the Sharpe ratio is an astounding 3.6 which is amazing. Of course, it has only been two months, but I am truly looking forward to see how the ratio looks four or so months from now. Check out the results here: http://high-probability-etf.collective2.com This seems to be the pattern for the strategy - slow and steady. I only trade extreme overbought/oversold conditions so the signals are few and far between (roughly 1-3 trades per month), so this is not a strategy for those who wish to trade on a daily basis. It is for those of us … [Read more...]

Trading Systems Owe Their Existence to Statistics and Technical Analysis

Guest contribution provided by ForexTraders. Technical Analysis is a term that is bandied about in the investment world as a most useful tool, but investors that are not analytically inclined typically pass over learning that much about the topic.  Books and articles alike seem directed to the geek-side of the brain, and once again, most readers will tune out before the first page is read.  Technical jargon is the name of the game, but a general overview is all that is really needed to use these invaluable trading tools. For those active souls that prefer security, commodity or forex market trading and who “dumb down” when “TA” is mentioned, today’s software tools will do most all of the work for you.  There is no need to have … [Read more...]

Short-Term High-Probability, Mean-Reversion Indicator. Several ETFs Hit Extreme Readings.

The QQQQ trade in the High-Probability, Mean-Reversion strategy continues to look good. The Q's finished the day slightly lower which could be a telling sign over the short-term. With SPY and DIA in a short-term "very overbought" state, Mr. Probability is telling us that a short-term reprieve looks likely. Both of the high-liquid ETFs have an RSI (2) that exceeds 99.0 which is a rare event. The last two times we have seen readings like this the market moved lower. However, we also witnessed an occasion earlier in the year, the 3/5 gap to be exact, where the market rallied for several weeks and pushed the RSI levels to astronomical levels. The former looks more probable, but as always, I will keep my stops at a reasonable level just in case … [Read more...]

Short-Term High-Probability, Mean-Reversion Indicator. Several ETFs Hit Extreme Readings. QQQQ Trade.

It was another day of gains for the major market benchmarks. Short-term, the major indices look a bit frothy. Three out of the four broad market indices remain in an "overbought" to "very overbought" state. The other, QQQQ, reached extreme levels today and as a result I sent out a trade alert to my subscribers. So far, so good. QQQQ moved roughly $.35 lower and the trade is now 7% higher. If all goes well, this will be the third successful trade in the strategy and would put the High-Probability, Mean-Reversion Strategy over 10% since it was initiated back on Nov. 6th. Tomorrow brings the much anticipated FOMC meeting which should certainly move the markets. Over the short-term the bears look like they should have the edge even with the … [Read more...]

Short-Term High-Probability, Mean-Reversion Indicator. Several ETFs Hit Extreme Readings. Potential Trade?

Before I delve into today's market action I would like to mention the GDX trade yesterday. Last Friday I placed a trade in my High-Probability, Mean-Reversion strategy using GDX as the underlying. GDX had moved into a "very overbought" state and the RSI (2) had pushed above 99 with strong bearish seasonal conditions. As a result, I faded extreme reading with some GDX put in the options strategy and sold to open GDX in the ETF strategy. I closed out the trade yesterday for a 12.3% profit in the options strategy and a 2.4% in the ETF strategy. Again, the High-Probability, Mean-Reversion strategy is broken up into two separate strategies, one using only ETF options and the other using only ETFs. So, now that we have covered yesterday's … [Read more...]

GDX in the Books

The second trade since concentrating solely on the High-Probability, Mean-Reversion Strategy reaped 12.3%. According to the Collective2 page, the strategy is now up 8.8% since it began back on November 7th (when I started to  the 30-day Free trial). The response has been overwhelming and I will be limiting the subscribers to keep it manageable with emails, etc. So if you want a spot get in while you can! I do apologize for not adding my High-Probability, Mean-Reversion numbers last night. I was extremely busy with other exciting projects that I think will add significant value to the service in 2011. I can assure you that I will be back tonight with my daily readings. As for all of my loyal subscribers, I appreciate all of the emails … [Read more...]