The purpose of this site is to share results of a trading system that I use for identifying both long-term and short-term trading opportunities. I take the time to do this because of my passion for investing and helping others succeed. The system helped me avoid the "Crash of 2007/2008" and every major correction since then. The cornerstone of my trading system are analyses of market liquidity to gauge longer-term market sentiment and equity and index options (put/call ratios) to identify short-term entry and exits.

This site is for information purposes only. Past performance of the trading system is not a guarantee of its future success. Please consider consulting a qualified investment adviser before making investment decisions.



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Friday, January 24, 2014

Done deal....See you in about 3 months

With the options market showing signs of fear (as is the VIX) and the low likelihood of a recovery today above 1814.75, I pulled the trigger at 1803 to reduce my equity position to 30% (actually 26.9 by the time I finished executing all my trades) with a 1:4 ratio of alpha to low vol/dividend stocks.

I was really hoping to catch a higher peak for this "final" selling but oh well.  I would rate my trading "performance" a B+ -- sold 50% at 1825 and then another 20% or so at 1803.  If the market tanks, then I'll give myself a higher grade :)

As I mentioned in my posts over the last few months, this weakness should persist for the next three months or so.  Therefore, I'm going to sit back and wait for a buying opportunity.


Secondary fallback

I wanted to alert my readers that if the S&P appears like it won't close above 1814.74 today, I will be executing my plan to sell my equity position down to the 30% level.  This 1814.74 level represents a ATR3 trailing stop reversal and is my fallback if all else fails to trigger a signal.

Thursday, January 23, 2014

Not quite yet

Despite the pullback today, with a half hour left in the trading day, options activity doesn't support a sell signal today.  More later.

Wednesday, January 22, 2014

Signal Tomorrow?

My options model could generate the signal that I'm expecting tomorrow.  For those of you that monitor the total equity put/call ratio, I'll be looking a value of 0.82 or anything above .90.  As I indicated in my prior post, I will be reducing my equity position to 30% (I may have said 33% earlier) if a signal is generated.  I'll post an update tomorrow.

Monday, January 13, 2014

Preparing for more downside

Since going to a 50% equity position on January 6, I continue to see weakness that corresponds with the macro indicators I follow (e.g., commitment of traders, weekly RSI).  I wouldn't be surprised, however, to see a rally to what I believe will be a intermediate peak sometime between January 16 and 28.  I will be using my options model to assess when I pull the next trigger which will be a reduction of my equity position to 33% that's comprised of a mix of 11% alpha/core and 22% dividend paying/low volatility ETFs -- a "defensive" 33% mix.  Please note that this 33% equity position is the lowest level that I plan to go to for my long-term portfolio during the anticipated weak period from February to May.  I've already taken profits on my cash (trading) account.

More later on the timing of the next move.

Monday, January 6, 2014

Time for some action

As I indicated last year, the market will likely show signs of weakness during the February to May time-frame.  With this in mind, I began looking for a weekly RSI divergence on the S&P.  Well last week, this negative divergence "carved" itself onto the charts.  If it were closer to February, my inclination would be to sell 100% of my core equity position as my strategy would dictate.  However, I couldn't totally ignore the fact that February is just around the corner and a negative divergence is in place.  Thus, I assessed my short-term options model and learned that a sell signal would likely "fire" today.  With these factors in mind, I decided to sell 50% of my equity holdings and take a nice profit from last year's run up.

As we get closer to February, I'll be looking for confirmation of a top and if necessary, identify other selling opportunities.  Please note that because I do not foresee a protracted decline, I will not be going short anytime soon.  I'll be updating the sidebar for the blog to reflect my 2014 predictions.