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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Thursday, June 20, 2019

Is it a divergence? -- A case for a small short trade

The criteria I set last week for a negative RSI divergence will not be met this Friday.  However, in looking back at the charts from the highs reached at the beginning of May to the highs reached today, a weekly negative RSI divergence will be formed.  Because of the aggressive move over the last three weeks, this divergence hasn't had a long time to form and thus, my confidence over its significance isn't high.  In the spirit of my strategy, I plan to place a small short trade using the ETF SH amounting to only 5% of the value of my long positions (as opposed to 10% as originally planned).  Going forward, I still plan to "ratchet" into shorts with the next increment being 25% of the value of my long portfolio (assuming that a clear divergence forms over a more extended period while the market rises).  The following chart depicts the divergence drawn in white.