August 22, 2017

Short-Term, High-Probability, Mean-Reversion Indicator – TBT Moves Into An Extreme State.

It has been a strange few weeks in the market. We had several trading days of strong resistance in the S&P 500 (SPY) and have basically sold off since the beginning of earnings season. Is it me, or does the market almost seems too predictable at the moment. Will the market truly be this simple to predict over the coming months? I am certainly not claiming to have the magic crystal ball, but at the moment the market just feels heavy and tired. With the old Wall Street adage about to grace us with its seasonal presence, I feel like we have seen the highs for a while. I expect to see a decent decline during the summer doldrums, which I think will offer a very good buying opportunity over the long-term. We could see a few gaps … [Read more...]

Strategy Continues to Outperform the Market – Up 34.6%

I took a hiatus from my daily post yesterday so that I could evaluate the latest trades in my High-Probability, Mean-Reversion Strategy. I closed out my Silver (SLV), Russell 2000 (IWM) and S&p 500 (SPY) positions during the last two trading sessions for an nice overall return. Both the SLV (+19.8%) and IWM (+21.3%) trade were profitable. However, the SPY trade did not experience the same good fortune. The strategy experienced its first loss since it was initiated back in November as SPY lost 20.2%. The High-Probability, Mean-Reversion strategy is now up 34.6% since it was initiated six months ago with a win ratio of 92.3%. So far the strategy is up 14.2% for the month April. Check out the results yourself. The performance … [Read more...]

Short-Term High-Probability, Mean-Reversion Strategy – Silver, Russell Trades Successful and A Brief Discussion on Position-Sizing (SLV, IWM)

The High-Probability, Mean-Reversion Strategy reaped further success today. Towards the close of the trading session I was able to close out IWM from last week and an SLV trade that I placed this morning - both for a nice profit. The IWM trade made 21.2% and the SLV made 19.8%. So far the strategy is up 8.9% for the month of April. Check out the results here. I still have my other trade on from several weeks ago and I expect to close out the trade once the gap from 3/30 is closed. Yesterday I mentioned that if Silver (SLV) opened up todaythat I would send my subscribers a real-time trade alert. Indeed that set-up came to fruition after SLV pushed $0.30 to $0.40 higher at the open. Towards the end of the day SLV had pushed almost … [Read more...]

Short-Term, High-Probability, Mean-Reversion Strategy – A New Addition (SLV)

Per the title of my post, I have decided to add the Silver ETF (SLV) to my High-Probability, Mean-Reversion Strategy. The ETF has wonderful volume/liquidity which makes the bid/ask spread extremely tight. It is certainly an appropriate addition to the strategy. Thanks Betty! With that being said, Silver (SLV) has pushed into an extreme "very overbought" state. Couple that with an RSI (2) of 99.9 and I think a short-term lies ahead. If indeed SLV opens higher Monday I will most likely place a trade in the strategy. Subscribers stay tuned for your real-time alerts and tweets. 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. … [Read more...]

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

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 – 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. A Few Oversold ETFs, But No Extremes.

More uncertainty entered the market today. North and South Korea conflict, more allegations of insider trading and continued concerns plagued the market today and one has to wonder if this market can gain any ground as we move closer and closer to the 2011. Fortunately, I do not concern myself with these types of issues in my trading. The so-called noise does not concern me as much as when the ETFs I follow hit a short-term oversold/overbought extreme. The High-Probability, Mean-Reversion Indicator was once again successful in pointing out the short-term direction in overbought Retail sector (RTH) as well as the Semiconductors (SMH). After today's market-wide drubbing, several of the ETFs that I follow have moved into a short-term … [Read more...]

Short-Term High-Probability, Mean-Reversion Indicator. Semiconductors and Retail Overbought.

As I stated last week, the day after Thanksgiving is historically bearish. Well, for most of the day the historical tendency held true, but as the day progressed the bulls slowly chipped away at the losses and as a result, two out the four major indices (QQQQ and IWM) managed to close the day higher. Actually, quite a few of the ETFs I follow in my High-Probability, Mean-Reversion Strategy advanced today, but only two managed to reach a short-term overbought extreme: Retail (RTH) and Semiconductors (SMH). Both moved into a short-term overbought territory and the RSI (2) for both pushed above 95. As a result, both on currently on my radar, so subscribers stay tuned tomorrow as you could be receiving a trade alert at the beginning of the … [Read more...]

Short-Term High-Probability, Mean Reversion Indicator. Weakness After Options Expiration?

Options expiration started out with a sharp decline at the open which I thought might just close the gap on SPY at $118.71. The ETF fell as low as $119.25 before rallying to close the end of the week at $120.29. Historically, the week after options expiration, particularly the trading day immediately following options expiration is quite bearish. While there is no true edge currently, at least according to my High-Probability, Mean-Reversion Indicator, I do think that history will once again repeat itself on Monday. I expect to see a close of the gap early next week and possibly a return to the declines that began on 11/08. The one thing that could keep this market afloat over the next week or so is the bullishness that surrounds the … [Read more...]

Post Options Expiration Fallout?

After the best advance since 1939, the market has continued its trod higher right into the middle of October and most importantly, options expiration. As expected the advance has once again, pushed the many of the ETFs I trade into a short-term "overbought" state (mentioned in subscribers' weekly report). Historically, the trading session (and the week for that matter) following options expiration is overwhelmingly bearish. The odds increase dramatically when the market is in an overbought state. This means that since the market held up this past week (as it usually does pre-expiration) the probability of a move lower on Monday increases substantially. I currently have an SPY and TZA positions and will be looking at FXE … [Read more...]