August 30, 2014

Short-Term High Probability, Mean-Reversion Indicator – South Korea (EWY) Overbought – VIX Hits Historical Extreme

3-38-2011-HPMR

The trading day began with a small bounce higher which lasted through most of the day. During the final hour sellers finally stepped in and pushed the market lower. Could we see lower prices ahead? I stated the following this weekend: There are lots of bearish signs moving into the market. Over the past week, the VIX has gone from more than 30% above its average to more than 15% below. In the past this type of volatility in volatility has been overwhelmingly bearish. If you just look at 15% both ways there are eight instances when this type of movement has occurred and only once was it bullish for the market one month later. Furthermore, the major market indices are overbought on a short-term basis and nearing overbought on an … [Read more...]

Short-Term High-Probability, Mean-Reversion Indicator – Gold, Oil and Natural Gas Hit Extremes

3-23-11(HPMR)

The stock market opened the day lower and toiled around negative territory in the early part of the trading session, but bounced hard during mid-day to finish in positive territory. As a result, gold (GLD, gold miners (GDX), oil (USO) and natural gas (UNG) pushed into a short-term extreme. Natural Gas is the one to watch here. Given that the High-Probability, Mean-Reversion Indicator has pushed into a short-term extreme and that the RSI (2) has moved above 99, it is highly plausible that a short-term reprieve is near (1-3 days). Subscribers stay tuned. … [Read more...]

Short-Term, High-Probability, Mean-Reversion Indicator

Untitled

Here are the current readings for the High-Probability, Mean-Reversion Indicator. Oh yeah, if you haven't noticed the table is slightly different. I would love to know what you guys/girls think. Any feedback would be greatly appreciated. Also if you have any suggestions for ETFs that you would like to see on the list let me know. Just know that the bid-ask spread must be reasonable or i just isn't worth following because an options trade would not make sense when using the strategy. Liquidity is key. … [Read more...]

Strategy Continues to Outperform – Up 28.0% Since Inception

A wonderful beginning indeed. The strategy had another successful trade marking the eighth straight winning trade since the strategy was initiated for a win ratio. The return - 28.2%. Check out the results (trades, returns, ratios, etc.) at the following link: High-Probability, Mean-Reversion Strategy Obviously I am pleased with the win ratio (100%) since I initiated the High_-Probability, Mean-Reversion strategy, but I am a realist. I realize there is no holy grail in trading. One thing I do know for certain is that I have a unique, and concrete, options trading strategy that makes the world of sense to me and I trade it to make money over the long-term. Furthermore, I realize that the less I trade, the better my strategy will … [Read more...]

Short-Term High-Probability, Mean-Reversion Indicator

Here are the numbers after today's trading session. I will be back later this weekend with more info. The trade continues to look good an if we get a nice boost Monday we could reach our point of exit. Have a great weekend and as always thank you so much for the support. I couldn't o this without all of your kind words and continued support. If you haven’t already, don’t forget to sign-up for my Free 30-day trial. Also, for those of you who live on Facebook. You can access my daily info there as well. Just click on LIKE. Short-Term High-Probability, Mean-Reversion Indicator – as of close 3/18/11 Benchmark ETFs * S&P 500 (SPY) – 36.5 (neutral) * Dow Jones (DIA) 36.0 very (neutral) *Russell 2000 (IWM) – 46.1 … [Read more...]

Short-Term High-Probability, Mean-Reversion Indicator – EFA Trade Still In Play

Today the major market indices bounced off of short-term "very oversold" extremes and pushed the them back into a short-term neutral state. The EFA trade obviously benefited from the surge higher and is now well within reach of a nice profit, especially if the futures (which are significantly higher as I write this) hold into the open tomorrow. Tomorrow also marks triple witching, which is when stock index options, stock index futures and stock options all expire. Some traders refer to the day as "Freaky Friday". Triple witching brings volatility (like we haven't seen enough of that this week) and I expect we will see plenty of that tomorrow as everything expires and headline news continues to pour in regarding the ongoing turmoil … [Read more...]

Short-Term High-Probability, Mean-Reversion Indicator – The Trade (EFA)

Monday I placed a trade in the High-Probability, Mean-Reversion strategy. It was the first trade in several weeks. The following day the catastrophe in Japan took another turn for the worse and the trade I had placed moved substantially lower. Over the past few days volatility has reigned supreme as the ETF has vacillated in a wide range only to move back down near the lows of the trade at the close today. However, now we have a very interesting set-up as the market has moved into one of the most oversold states in quite some time. EFA has a RSI (2) of 0.2. Yes, 0.2. EFA has managed to bounce off its 200-day moving average over the past two trading sessions. Couple this with the ETF wallowing in a short-term extreme "very … [Read more...]

Short-Term High-Probability, Mean-Reversion Indicator – Major Indices Ready for a Bounce?

I am going to keep it short and sweet tonight. I am still very enthused with the current trade in the High-Probability, Mean-Reversion strategy. The trade is currently down a bit, but I expect to see a continuation of the push higher that occurred throughout the day today. I also wanted to remind my subscribers to stay tuned for more updates or alerts in the coming days. If you haven’t already, don’t forget to sign-up for my Free 30-day trial. Also, for those of you who live on Facebook. You can access my daily info there as well. Just click on LIKE. Short-Term High-Probability, Mean-Reversion Indicator – as of close 3/15/11 Benchmark ETFs * S&P 500 (SPY) – 26.9 (oversold) * Dow Jones (DIA) 26.9 … [Read more...]

Short-Term High-Probability, Mean-Reversion Indicator – It’s Finally On!

Yesterday, I mentioned that EFA had moved into a short-term oversold state and that the RSI (2) for the ETF had pushed to slightly above 5. I warned that a potential trade was near. The catastrophic events in Japan over the weekend led to further declines today and pushed EFA into a short-term extreme with the RSI (2) hitting a low of 1.12 before coming back to close the day at 1.52. The gap lower today will close once the EFA hits $58.84. This will most likely be my exit point if indeed EFA moves higher over the next few days. As I write this the futures are significantly lower so we will see if we get stopped out first. Tomorrow should indeed be an interesting one. If you haven’t already, don’t forget to sign-up for … [Read more...]

Short-Term High-Probability, Mean Reversion Indicator – EAFE (EFA) Moves In Short-Term Extreme

This past week marked the two year anniversary of the current bull market. The anniversary of the current bull market was quickly met with selling this past week as the Dow, S&P and Nasdaq lost 1.0%, 1.3% and 2.5, respectively. Yes, the latest bull market has made it to the somewhat elusive two year mark. Only fourteen out of thirty-three bull markets have made it past two years. That isn’t an overwhelming statistic, until you start to compare the average returns of the prior two years bull runs to the current bull market. The average return for previous bull markets was 43.6 percent which is roughly half of the current 86.7 percent return of the current bull market. There have been only two bull markets that have exceeded the … [Read more...]