June 23, 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...]

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...]

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

Short-Term, High-Probability, Mean Reversion Indicator - as of close 10/25 I hope that all of you find the following information useful in your trading endeavors. I will be back later with my daily market commentary. After being deeply oversold on a short-term basis, Brazil (EWZ) bounced back today, and is now sitting comfortably in a neutral state. The ETF gained of $.70 or 0.92%. The at-the-money EWZ Dec10 76 puts had a net change today of $0.55 or 16.4%. Even after today's failed rally (considering the highs of the day), there are still a few ETFs that I am watching for a potential trade. The QQQQ is an obvious one that I have added to my short-term watchlist. The tech-heavy index is on the border of being "very overbought" … [Read more...]