August 20, 2017

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...]