On Friday I doubled my [[QID]], [[SDS]], and [[DXD]] positions. These ultra-short etfs are very oversold and due for a bounce. I am now net short the indexes by the largest amount, year-to-date.
If these trades turn out the same way as the recent testing suggests they might, I can expect an 88% win rate and an average gain of 5%. (Check out Pennings of an Analyst for the original test). Note though that the Stockfetcher tests are rudimentary and exploratory. I have not worked out or tested an entire system for this strategy, but I believe in the signals enough to take these trades.
[[DXD]]
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The strong, bullish days of the past week have set up a situation where a pullback is likely. The average drawdown of the trades tested was -3.2%. The DXD trade is currently drawn down -3.7%
Woodshedder,
I was just looking at this. I’ve been using the RSI(2) a lot lately and it really fills in the gaps as to when to pull the trigger. With the current set-up, I also like that we are seeing some divergence in the STO. I’m jumping aboard the Short Train!
Oh Great ! Woodshedder is net short. I guess we rally 2000 points from here. C’mon Wood, why don’t you just take one for the team and go net long.
One thing to consider (and test) is since the ETFs track the underlying composite indexes, you may want to look at the indexes themselves for the actual signals and then just use the ETFs as your trading vehicles. For example, $COMPX is only at 92.48 right now. Still good but not really at an extreme just yet. If I had to make a call, I’d say we might have one more up day left.
The pullback needs to wait until Wednesday. I’m chaperoning a first-grader field trip tomorrow and won’t be able to trade. C’mon bulls, just hang tough for one more day!
CAP, I’m not sure if you’re serious. I think being net short when the indexes are at their highest point in the last 3 months is a good trade.
bhh- I’ve considered that about the indexes versus ETFs. I need to test the underlying versus the tracking issue. Right now the Qs are at 95.76, SPY at 95.64, and Dow 83.73.
Something I want to test in the future is when should the trigger hit. If hits at the extreme, say <3, like your tests show, then it is likely that some trades will be missed. (I intend on using this on the indexes, where I can lever up without fear of a catastrophic move). I am looking forward to testing for the average drawdown and number of days before price reverts.
Dogwood, for my sake, I hope you get back in your car to hear that the indexes are down a couple hundo. But for you, I'll give you another day, as long as it is not a huge rally!
Your latest string of accurate calls vexes me.
I am honoured to have vexed thee.
AHHHHHHHHHHHHHHH!
I missed a 40-point plunge in the Nasdaq futures.
Hate when that happens!