[[KHD]] KHD Humboldt Wedag International, Ltd. operates as an industrial plant engineering and equipment supply company. The company provides equipment, and engineering/design services for cement, and coal and mineral processing industries.
[[GMCR]] Green Mountain Coffee Roasters, Inc., through its subsidiaries, engages in roasting, packaging, and distributing roasted coffee primarily in the northeastern United States.
[[AAP]] Advance Auto Parts, Inc. operates as a specialty retailer of automotive parts, accessories, and maintenance items for do-it-yourself and do-it-for-me customers in the automotive aftermarket industry.
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woody: nice picks but the RSI and Sto’s are in nosebleed territory (what happened to the RSI (2) rule?) And shouldn’t we have bought these closer to the 50 or the 200 or in-between to catch the breakouts earlier?
Not everything Woody does is RSI(2) related. Note The Daily Breakout headline, which is a running feature.
Buylo- yes, they are extended, but that is the nature of a breakout. Buying a breakout, in my opinion, should not be a short-term trade, unless you are just a momentum player and are looking for a quick 1-2 day trade.
A stock that breaks out from a long base sometimes marks the beginning of a new and hopefully powerful trend. Hence, one should be prepared to hold the stock for long enough to catch a significant portion of any trend that develops.
If one trades breakouts, and doesn’t have a high win percentage (in my experience, trend following systems typically have more losers than winners) then he must have profits that are significantly, say 2-3x the size of his losses.
Anyway, that’s a long winded way to say I don’t worry so much about the indicators when buying a breakout. What I look for is a pattern, price, and volume, and the interaction of all three.
As for catching breakouts earlier, if I had a way to predict which stocks would breakout, before they actually did, then I probably would not be writing this tonight 😉
Hey wood, is there a place where all the RSI(2) data you have is aggregated?
I am doing my own testing and just wanted to see if I could compare results.
I have resorted to using SPY instead of leverage ETFs because of the lack of history that you have mentioned. I figure you can always apply the scan to SPY but place the trades in SSO.
I am also using a simple indicator to determine if the etf is “bullish” or not. That indicator is simply DMA(50)>DMA(200). If the ETF is in a bullish mode, you buy RSI(2)80, if the ETF is bearish you would sell RSI(2)>90, buy RSI(2)>20 or the equivalent with ultra/ultrashort ETF. I haven’t testing the bearish thesis yet, but I imagine that would be more useful in our current market.
Let me know if you have any feedback, or any better way to communicate with you.
Also, something that might be of interest to you, I am a programmer.
Sia, most of the RSI(2) posts are categorized in the “RSI(2) Oversold Play” or in the “Strategies” category. Other than that, bhh at http://www.ibdindex.blogspot.com and Dogwood (see my blogroll) have both posted some killer research about the strategy.
I agree that a MA component can improve results.
As for SPY vs. SSO. The strategy is profitable on the SPY, the win rate is good, so it is easy to assume that SSO would be doubly good. However, I’m finding that there are some anomalies within the leveraged ETFs, so be careful assuming there is a 1:1 correlation between the two.
I have tested it as a short strategy too, and I think there is promise there, but right now I’m focused on working out the long trades.
Let me know how things turn out. My public email is woodshedder_blogspot at yahoo.
Shed, check out CPHD, it’s starting to move up again.