The Pullback and Trade Results

 I normally do not do this but I have decided to post our trading results today. The perforamnce of the ETF Extremes strategy has been outstanding so far and by the response we could be closing out the strategy to new subscribers very soon. I thought all of my loyal readers should know this ahead of time just in case you planned on signing up with our service. We will have to add subscribers to a waiting list once our subscriber limit is met.

Another signal was issued in our ETF Extremes strategy on Monday. Several of our proprietary indicators were in “extreme” territory, so as a result we sent out the following trade alert to our participating subscribers: Buy to Open SPY Nov06 133 puts (SFBWC) for $2.40.

We were anticipating a sharp move lower shortly after the alert was sent. The market traded sideways for remainder of the trading day so we decided to hold as a result. The market finally moved lower on Tuesday and we were able to close the position for $2.65 or a 10.4% profit on the trade. By staying diligent and sticking with our guidelines we have had a 100% win ratio (8 out of 8 winning trades) YTD for a total YTD return of 35.7%. In most cases, we would have held the position longer, but given the Fed meeting tomorrow and the sharp move that typically follows we decided it was best to take the strategy’s gain off the table. Furthermore, for the last several years the market has traded in an extremely tight range ahead of the fed announcements. It is always prudent to stay flat ahead of any market moving data. No one knows for certain how the market is going to react. We did not want to test what has been the historical norm so this was just one more reason to close the position out.

Shortly after we exited the position the market began to rise and then Yahoo came out with an earnings warning that reversed the short-term trend of the market and moved it sharply lower. Obviously, had we held our position we could have made more on the trade, but our strategies are in it for the long-term so we did not want to take any unnecessary risks. The news could have easily been positive and we would have missed out on the 10.4% profit. Anyway, at the end of the trading day the Nov 133 puts worth $2.50, well below the price at which we closed the position out.

Of course, we do not expect to keep the 100% win ratio going forward, that would be unrealistic, but we do know that with our money management and capital preservation techniques this strategy can be extremely profitable over the long-term. With a total YTD return of 35.7% we are extremely enthused about the strategy. The combination of our two strategies, Gap Fade and ETF Extremes, has led to total YTD return of 17.5%.

www.crowderinvestments.com.