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Moby Waller
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Moby Waller is a former CBOE Market Maker floor trader and off the floor London-based European Index Options Trader. He now works with and is a Research Analyst and Portfolio Manager for's ETF TRADR (, which provides... More
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  • Strong Percent R Readings Indicate Further Market Upside - Revisted For 2014

    Once again, extremely strong momentum/trend readings for the broad market prove very bullish.

    We previously examined this in 2012 and here (as well as before then) - when the market gives an extremely strong Daily reading on Williams Percent R (using the BigTrends inputs and method for %R), it actually is usually a bullish signal for further upside to continue. This is logical given that a very strong reading on this indicator shows the strength of the current trend - but goes against many investors & traders out there who look for a reversal using "overbought" or "oversold" strategies - we know that overbought can go more overbought and of course "the trend is your friend".

    With both the Daily and the Weekly Percent R readings on the S&P 500 Index ETF (SPY) hitting 100.00 max readings on the last trading day of 2013, we did a new optimization of the S&P 500 Index (SPX) Daily chart over the past 10 years, January 1 2004 to January 1 2014. Previously we had found that daily close readings over 99 on Percent R were a good Buy signal over the next 17 trading days (a bit over 3 weeks). On the SPX over this particular time frame, the optimal reading was over 98.8 over 19 trading days (a similar result both on level and duration) - over the past 10 years, this system with these settings is 78.6% winners with a win/loss size ratio of 1.39 (33 winners vs 9 losers with winning trades about 1.4x as big as losing trades).

    In general the past 10 years has been a bullish one, but remember that we saw a giant plunge in the market from October 2007 to March 2009. A nice thing about this system is that it largely avoided the losses of that time period (because it didn't generate many Buy signals during that time frame). For example here is the year-by-year results:

    Percent R High Readings System Equity Curve
    (click to enlarge)

    You can see that there were only 2 down years for this system based on these settings (2008 and 2011), and both of those where very small losses - and there was only 1 signal in all of 2008, compared to as many as 8 in the strongest years of 2012 and 2013 (remember that this is on a 19 trading day holding period, basically a month - with no concurrent signals - so there is a maximum of about 12 trading signals a year).

    The Equity Curve of this system when compared to the market since 2004 shows the smooth nature of the gains and how it largely avoided the big losses/drawdowns that the market had:

    Percent R System Equity Curve, 2004 to 2014
    (click to enlarge)

    SPY 2004 to 2014 Chart
    (click to enlarge)

    Here you can see all of the signals for 2013 - also how we currently are in a "buy" signal in effect from 12/26/13:

    SPX Daily Chart
    (click to enlarge)

    The nice thing with the signals in strong years like 2012 & 2013 is that it kept you in the market much of the time during these strong bull runs. The only losing signal in 2013 was the most recently closed one and was actually basically a breakeven - Nov 14 to Dec 11, SPX was down 0.50 from 1782.75 to 1782.22.

    Also remember that a strong January (and we've tested this before, as well as the "First 6 Weeks" indicator), portends well for a strong year in general for the market ... (DIA) (QQQ) (IWM) but that's another analysis/story that will unfold over the coming weeks.

    Bottom line is that extremely strong Daily Percent R (Williams %R) readings using the BigTrends method and inputs have been a good indicator for further market upside when we've tested this multiple times in the past over multiple time frames - and continued to work well in 2013. Don't be afraid of jumping on board a strong trend.

    Tags: SPY, QQQ, IWM, DIA
    Jan 03 1:40 PM | Link | Comment!
  • DIS: A 'No-Brainer' Stock To Own, In A Nutshell

    This article is a quick analysis that delves into the overall fundamental outlook and the big picture stock price movement, but not in an in-depth manner. Please do your own research and due diligence before investing in this or any other stock. Additionally, we may go long or short DIS at any time in our real-time Options Trading Recommendation services. Disclosure: no current personal holding in this stock, but one may be added at any time.

    By 'long-term', in this case we are referring to a 1 to 4 year time horizon, beyond that it gets rather difficult to forecast due to uncertainty and how rapidly things can change in the modern connected world.

    The Walt Disney Company (DIS) -

    An incredible portfolio of global intellectual and other properties makes this a pop culture behemoth unlikely to slow down. Continued growth potential, reasonable valuation, good stock performance over long and short term, and always looking to buy/create valuable properties and the 'next big thing'.

    They own all or part of assets such as ESPN family of networks, ABC (includes ABC Family,etc), amusement resort parks, Pixar, Lucasfilm/Industrial Light & Magic, A&E Networks (includes A&E, History Channel, Lifetime Network, etc), vast library of animated classics … and much more.

    Additionally, they own brands such as the Mickey Mouse Club, the Muppets, Star Wars, Marvel Entertainment, Baby Einstein and many more and are regularly acquiring more of the top global intellectual properties. 'Nuff said (which is a Marvel Comics catch phrase).

    Current snapshot of fundamentals: Forward Price/Earnings Ratio (P/E) around 15. Various profit and ROE/ROA margins mostly in the 10 to 20% area. Dividend yield around 1.1% currently. Does have $14 billion debt (cash of around $4 billion), but that seems very manageable. Recent quarterly Revenue growth of 7%, Earnings growth of 12%. (data from Yahoo Finance).

    Taking a quick look at the shorter and longer term charts and technical analysis picture on DIS:

    On the Weekly Chart below covering the 2007 market crash, 2009 rebound, to the present, you can see that DIS certainly shrugged off the 07/08 declines very well and quickly and has since pushed much higher on. This bodes well if the broad market does have some weakness in the coming years - which is certainly possible, given the large gains seen in 2012 and 2013.

    DIS Weekly Chart
    (click to enlarge)

    On the shorter-term Daily Chart below, we've focused on basically the last 12 months. The trend in particular from April is worth focusing on - a very choppy range (similar to the broad market S&P 500 Index (SPX) (SPY) range in place over that time frame, actually DIS looks slightly weaker). But the current break above the October range is bullish, by our momentum style trend analysis standards.

    DIS Daily Chart
    (click to enlarge)

    Bottom Line: Sometimes as an investor and/or trader, you just have to 'Keep It Simple, Stupid' and go with the obvious play. To me, DIS is an example of that.

    (click to enlarge)

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

    Tags: DIS, long-ideas
    Nov 17 5:18 AM | Link | Comment!
  • 20 Most Popular ETFs Of 2013, Revisited

    A couple of years ago, we analyzed the most popular Exchange Traded Funds (ETF) by average daily trading volume. Here is the link to the original article from 2011.

    One important factor to our list is we've stripped out all of the Inverse, Ultra, Bear, etc ETFs to find only the "pure" sector and index plays.

    Here is an update to that list for August 2013:

    Most Actively Traded ETFs Table

    *Note the dominance of iShares and SPDRs in the above list.

    *Most of the names of the list are the same as 2 years ago, but the order has shuffled around quite a bit.

    *One notable ETF that has dropped off the popular list is US Natural Gas (UNG). Another one that failed to make the new list is iShares Taiwan (EWT).

    *New notable additions to the list include MarketVectors Gold Miners (GDX), iShares Real Estate (IYR), Utilities SPDR (XLU), and Consumer Staples SPDR (XLP).

    *Big Movers up on the list include Japan ETF (EWJ) and VIX Volatility ETF (VXX).

    Note that the main DJIA ETF (SPDR Dow Jones Industrial Average DIA) once again didn't even make the Top 20 here.

    Always be sure to check the holdings and expense fees (as well as bid/ask spreads and option liquidity) of an ETF you are considering investing in or trading. Yahoo Finance is a good easy source for Top 10 Holdings information, for example.

    We track and trade all of these very liquid ETFs and more in our ETFTRADR trade recommendation program.

    By Moby Waller,

    Aug 09 8:40 AM | Link | Comment!
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