August 24, 2017

A Few Indicators I’m Watching at the Onset of 2014

Happy New Year!

I’m looking forward to starting 2014 just how we closed out the last half of 2013. The slow and steady, logical strategies continue to work in any market. we just need to keep a close on volatility levels and adjust accordingly. Volatility levels, overbought/oversold extremes and position-sizing will continue to lead the strategies to continued success. It’s a simple, logical approach. Anyway…

Today the market moved decisively lower.

For those of us who currently have bear call spread positions  the move was more than welcomed…and there’s a decent opportunity more downside is to come.

According to acclaimed sentiment analyst, Jason Goepfert, we are witnessing some of the most extremes in market history. In fact, we’ve only seen investor confidence this high very few times over the years. Typically, when these these type of extremes occur, just like the High-Probability Mean-Reversion indicator,  a short to intermediate-term reprieve is right around the corner. Did we see the first glimpse of that today?

It’s definitely too early to tell, but if you follow the Stock Trader’s Almanac “First Five Days” indicator and “January Barometer” you will want to pay close attention how the market fares during the first month of the yer.

According to the almanac, ‘the last 40 up “First Five Days” were followed by full year gains 34 times for an 85.0% accuracy ratio’. Even more accurate is the “January Barometer”. The January Barometer basically states how January goes, the market goes. So, we will soon know where the probabilities lean and I for one will be paying close attention.

If you are a believer in a statistical approach towards investing please do not hesitate to try my options strategies. I use simple mean-reversion coupled with probabilities for each and every trade. Give it a try, it’s free for 30 days.

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High-Probability, Mean-Reversion Indicator

High-Probability Mean-Reversion Indicator