August 20, 2017

Short-Term High-Probability, Mean-Reversion Indicator. Waiting for an Extreme.

As I stated before, the beginning of this week (Monday and Tuesday) are seasonally bearish. Typically, I do not trade based on seasonality, but I do like to pay attention to them as they often assist me when an ETF within my High-Probability, Mean-Reversion Indicator hits an extreme.

Currently, there are only two ETF within my daily list that are oversold, Utilities and the European Union, and neither have moved into an extreme state. So, I am sitting idly by until an ETF that I follow within my strategy hits an extreme.

It has been several weeks (Nov. 16th) since I have had a trade in the High-Probability, Mean-Reversion Strategy. However, as is usually the case , patience pays as the trade made 21.7%.

Admittedly, it has been a slow start since I started the High-Probability, Mean-Reversion Strategy, but the strategy only averages 1-3 trades a month. Moreover, with a trade that exceeds 20% I am completely content with the results so far and am certain that will be plenty of trading opportunities ahead.

As I always say opportunities are made up easier than losses, so I do not mind waiting for a High-Probability set-up, my trading approach is long-term. Remember, this is a marathon and not a sprint.

Anyway, with the ongoing Korean conflict, the Beige Book on Wednesday, the unemployment report out Friday and the uncertainty that surrounds the European debt crisis we could potentially see an extreme this week.

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Short-Term High-Probability, Mean-Reversion Indicator – as of close 11/29/10

Benchmark ETFs

* S&P 500 (SPY) – 45.5 (neutral)
* Dow Jones (DIA) –39.1 (neutral)
* Russell 2000 (IWM) – 61.2 (neutral)
* NASDAQ 100 (QQQQ) – 52.6 (neutral)

Sector ETFs

* Biotech (IBB) – 47.6 (neutral)
* Consumer Discretionary (XLY) – 51.5 (neutral)
* Health Care (XLV) – 35.9 (neutral)
* Financial (XLF) – 42.2 (neutral)
* Energy (XLE) – 53.4 (neutral)
* Gold Miners (GDX) – 43.6 (neutral)
* Industrial (XLI) – 52.4 (neutral)
* Materials (XLB) – 50.0 (neutral)
* Real Estate (IYR) – 53.6 (neutral)
* Retail (RTH) – 59.8 (neutral)
* Semiconductor (SMH) – 66.7 (neutral)
* United States Oil Fund (USO) – 69.1 (neutral)
* Utilities (XLU) – 29.5 (oversold)

International ETFs

* Brazil (EWZ) – 43.8 (neutral)
* China 25 (FXI) – 41.8 (neutral)
* EAFE (EFA) – 28.0 (oversold)
* South Korea (EWY) – 38.0 (neutral)

Commodity ETFs

* Gold (GLD) – 51.6 (neutral)

Ultra Extremes

* Small Cap Bear 3x (TZA) – 36.5 (neutral)
* Small-Cap Bull 3x (TNA) – 61.1 (neutral)
* UltraLong QQQQ (QLD) – 52.8 (neutral)
* Ultra Long S&P 500 (SSO) – 44.9 (neutral)
* Ultra Short S&P 500 (SDS) – 53.8 (neutral)
* UltraShort 20+ Treasury (TBT) – 35.5 (neutral)

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