I do not like discussing the trading signals generated by Exodus outside of the paywall. But we are flagging hybrid overbought. The signal became official on close-of-business Friday. That means everyone reading this very free and public blog has just as much opportunity to engage this trade as anyone who pays for an Exodus subscription. If you are an Exodus member, and this is annoying to you, reading my public announcement, you may want to consider channeling that energy towards actually trading this signal correctly. Because in my 1-on-1 talks with nearly 100 different Exodus members, I’ve yet to find someone who tells me they trade this signal the way you are supposed to.
First mental roadblock—it is called hybrid overbought. That seems to mean the system expects lower prices. Perhaps when the signal was designed, that was the intention, to identify a stress point from which lower prices would follow. And perhaps in the future, if we are in a prolonged downtrend, it will be useful at identifying a selling opportunity. A good way of knowing what the signal currently suggests you do (if you want your trading process to be driven by statistics) is to look at historical activity from all the other times the signal fired. My main takeaway is that 83% of the time the SPY was higher after 10 trading days:
I actively trade NASDAQ futures, not S&P futures, so I prefer QQQ (actually TQQQ) as my instrument for playing this signal. What I will do is simple—come Monday, when the stock market opens at 9:30am eastern, I will buy TQQQ. Then, near end-of-day Friday, July 20th (10 trading days later) I will sell my TQQQ.
Simple. So simple. Will I make money? That is, as always, to be determined.
What is not to be determined is what I need to do when Exodus flags hybrid overbought. I need to engage the long side. There. I have led you, fine horse, to water. Feel free to stare at the glittering blob or have a drink.
This is an uncommon signal. The last one happened on January 5th, 2018. I traded it, made money, then went up in the mountains for many weeks. This was the performance shown by each major index during the last overbought cycle:
Speaking of travel, a programming note:
I am headed to Hawaii this Saturday to explore the island of Kauai which I am told is in rough shape. Many trails closed, beach gone, etc. It could also be wet. Therefore I am not bringing a laptop. This means there will not be an Exodus Strategy Session next Sunday. This will be the first Strategy Session I have missed in 190 consecutive weeks. I feel like a jerk for leaving you guys without my research but I have no choice.
I will still be in Hawaii, but on the big island on July 20th. Hopefully I will find enough internet to close out my TQQQ position that I intend to buy tomorrow.
I have never worried about talking my trading edge in public because I know 99% of people aren’t going to do the work. Or even if they do, they will find ways to sabotage themselves, tilting off the plan and reducing their decision making to base survival instincts. Instincts hard coded into the sapiens DNA that are effective in many circumstances, but not too useful (and often harmful) in the world of money management.
These blog scribbles are for 21 year old me, who was starved for useful information and had to scour the internet for information on trading the stock market that wasn’t either a. generic SEO optimized shit b. charlatan/lifestyle watch and car shit or c. pure unadulterated garbage. Working closely with Exodus, and the fact that Exodus subscribers have invested in a platform that I truly believe anyone can build a consistent trading approach from, it seemed important to emphasize the hybrid overbought signal and how to trade it. So I will repeat:
Go long Monday morning, July 9th. Close said longs end-of-day Friday, July 20th.
I suggest broad market exposure via an index ETF. If you want to try your luck at stock picking, by all means do it. That ain’t my game.
Many decisions can be made simple. Given the right information any sane person should be able to arrive at the same conclusion and behave accordingly. Horse, water, etc.
This blog entry has been filed under the Category: Spoonfeeding
Most distinguished members of Exodus, the 190th edition of Strategy Session is live. Go check it out. Sorry in advance for missing the upcoming strategy session. I will have to update the model data points after-the-fact, which in my mind tarnishes the objectivity of the results, but I promise to do so as honestly as possible.If you enjoy the content at iBankCoin, please follow us on Twitter