Michael Clark's  Instablog

NEW TRADING POSITIONS SHORT-TERM TRADING INSTRUMENT: NEW SIGNALS FOR WED 29 May 2013.

Yesterday I introduced a short-term trading system, M5D/CGTSD Tester Tweet, which I wrote was best used with index options and stock options. It can also be used with any instrument one wants to trade in short spurts for gains of 5-15% in 3-8 days.

For instance, trading ARNA with out short-term system, Arena Pharmaceuticals, a stock trading at 8.94 today, has also been profitable, resulting in gains of 14.2% and 12.31% the last two trades, each trade lasting only 3 and 5 days respectively.

(click to enlarge)

TRADING ARNA

Entry Exit
# Type Bars Date Date P&L Pts P&L % Reason for Exit
******************************************************
1 Short 2 10/05/00 10/09/00 +4.12 +9.68 Exit Short Rule
2 Long 3 10/20/00 10/25/00 +4.88 +16.20 Exit Long Rule
3 Short 4 11/16/00 11/22/00 +11.13 +29.98 Exit Short Rule
4 Short 2 03/29/01 04/02/01 +1.39 +7.27 Exit Short Rule
5 Short 3 05/22/01 05/25/01 +0.55 +1.81 Exit Short Rule
6 Short 2 06/04/01 06/06/01 0.00 0.00 Exit Short Rule
7 Long 2 06/29/01 07/03/01 +3.49 +11.45 Exit Long Rule
8 Long 4 10/08/01 10/12/01 +0.09 +0.84 Exit Long Rule
9 Long 2 10/19/01 10/23/01 +0.68 +6.79 Exit Long Rule
10 Short 2 10/26/01 10/30/01 +0.13 +1.14 Exit Short Rule
11 Long 6 11/27/01 12/05/01 +0.32 +2.90 Exit Long Rule
12 Short 9 01/04/02 01/17/02 +0.49 +3.99 Exit Short Rule
13 Short 5 02/12/02 02/20/02 +0.27 +2.60 Exit Short Rule
14 Short 3 03/21/02 03/26/02 +0.60 +5.80 Exit Short Rule
15 Short 3 05/03/02 05/08/02 +0.40 +4.85 Exit Short Rule
16 Short 3 05/14/02 05/17/02 +0.25 +3.16 Exit Short Rule
17 Short 2 05/23/02 05/28/02 -0.03 -0.39 Exit Short Rule
18 Short 3 12/20/02 12/26/02 +0.37 +5.23 Exit Short Rule
19 Long 3 03/05/03 03/10/03 +0.36 +5.71 Exit Long Rule
20 Long 5 06/30/03 07/08/03 +0.53 +7.95 Exit Long Rule
21 Short 9 08/12/03 08/25/03 +0.11 +1.57 Exit Short Rule
22 Short 11 08/27/03 09/12/03 +0.20 +2.86 Exit Short Rule
23 Long 4 09/26/03 10/02/03 +0.95 +13.10 Exit Long Rule
24 Short 9 12/17/03 12/31/03 +0.51 +7.60 Exit Short Rule
25 Long 4 01/29/04 02/04/04 -0.03 -0.51 Exit Long Rule
26 Long 4 02/06/04 02/12/04 +0.09 +1.53 Exit Long Rule
27 Short 3 04/19/04 04/22/04 +0.26 +4.06 Exit Short Rule
28 Short 3 04/28/04 05/03/04 +0.35 +5.51 Exit Short Rule
29 Short 4 05/27/04 06/03/04 +0.12 +2.03 Exit Short Rule
30 Short 3 07/13/04 07/16/04 +0.63 +12.43 Exit Short Rule
31 Long 6 10/06/04 10/14/04 +0.17 +3.89 Exit Long Rule
32 Short 5 10/26/04 11/02/04 +0.34 +6.22 Exit Short Rule
33 Long 4 12/07/04 12/13/04 +0.27 +4.89 Exit Long Rule
34 Long 3 12/17/04 12/22/04 +0.65 +11.30 Exit Long Rule
35 Short 2 02/14/05 02/16/05 +0.47 +7.46 Exit Short Rule
36 Short 3 03/24/05 03/30/05 +0.14 +2.67 Exit Short Rule
37 Long 2 04/19/05 04/21/05 +0.48 +8.92 Exit Long Rule
38 Long 3 06/24/05 06/29/05 +0.22 +3.23 Exit Long Rule
39 Long 3 06/30/05 07/06/05 +0.26 +3.81 Exit Long Rule
40 Long 6 07/22/05 08/01/05 +0.44 +5.35 Exit Long Rule
41 Long 2 11/10/05 11/14/05 +0.38 +3.75 Exit Long Rule
42 Long 3 11/16/05 11/21/05 +0.73 +7.22 Exit Long Rule
43 Long 4 12/28/05 01/04/06 +1.49 +10.45 Exit Long Rule
44 Long 5 01/23/06 01/30/06 +0.16 +0.96 Exit Long Rule
45 Short 3 03/30/06 04/04/06 +1.49 +8.02 Exit Short Rule
46 Short 3 04/28/06 05/03/06 +1.01 +7.13 Exit Short Rule
47 Short 3 07/19/06 07/24/06 +0.15 +1.50 Exit Short Rule
48 Long 2 08/01/06 08/03/06 +0.21 +2.04 Exit Long Rule
49 Long 2 09/29/06 10/03/06 +0.77 +6.43 Exit Long Rule
50 Short 4 11/06/06 11/10/06 +0.83 +5.37 Exit Short Rule
51 Long 4 02/02/07 02/08/07 +1.47 +11.56 Exit Long Rule
52 Short 4 03/09/07 03/15/07 +0.08 +0.70 Exit Short Rule
53 Short 3 03/16/07 03/21/07 +0.23 +1.99 Exit Short Rule
54 Long 3 04/30/07 05/03/07 +0.80 +6.14 Exit Long Rule
55 Long 5 05/07/07 05/14/07 +0.44 +3.25 Exit Long Rule
56 Short 3 06/04/07 06/07/07 +1.11 +7.83 Exit Short Rule
57 Long 2 07/05/07 07/09/07 +0.22 +2.04 Exit Long Rule
58 Short 4 09/19/07 09/25/07 +0.59 +4.89 Exit Short Rule
59 Short 5 10/16/07 10/23/07 +0.68 +6.34 Exit Short Rule
60 Short 4 04/02/08 04/08/08 +0.31 +4.40 Exit Short Rule
61 Short 4 04/18/08 04/24/08 +0.26 +4.26 Exit Short Rule
62 Short 5 05/29/08 06/05/08 +0.25 +4.83 Exit Short Rule
63 Long 4 06/18/08 06/24/08 +0.06 +1.26 Exit Long Rule
64 Short 5 07/31/08 08/07/08 +1.33 +19.62 Exit Short Rule
65 Short 3 08/25/08 08/28/08 +0.10 +1.58 Exit Short Rule
66 Short 4 09/08/08 09/12/08 +0.23 +3.94 Exit Short Rule
67 Long 3 01/22/09 01/27/09 +0.77 +22.78 Exit Long Rule
68 Long 2 06/03/09 06/05/09 +0.38 +10.67 Exit Long Rule
69 Short 3 06/30/09 07/06/09 +0.19 +3.81 Exit Short Rule
70 Long 4 07/10/09 07/16/09 +0.13 +3.27 Exit Long Rule
71 Long 2 07/17/09 07/21/09 +0.28 +7.00 Exit Long Rule
72 Long 4 10/12/09 10/16/09 +0.33 +8.09 Exit Long Rule
73 Long 3 12/11/09 12/16/09 +0.39 +11.34 Exit Long Rule
74 Short 3 03/10/10 03/15/10 +0.10 +3.22 Exit Short Rule
75 Short 3 04/05/10 04/08/10 -0.01 -0.31 Exit Short Rule
76 Short 6 04/15/10 04/23/10 +0.02 +0.64 Exit Short Rule
77 Short 1 05/26/10 05/27/10 -0.14 -5.00 Exit Short Rule
78 Long 2 06/15/10 06/17/10 -0.01 -0.34 Exit Long Rule
79 Long 3 06/21/10 06/24/10 +0.24 +8.30 Exit Long Rule
80 Short 3 11/08/10 11/11/10 +0.05 +3.27 Exit Short Rule
81 Long 4 11/23/10 11/30/10 +0.10 +7.41 Exit Long Rule
82 Short 3 01/18/11 01/21/11 +0.22 +10.26 Exit Short Rule
83 Short 4 02/16/11 02/23/11 +0.05 +3.03 Exit Short Rule
84 Short 3 03/18/11 03/23/11 +0.08 +5.33 Exit Short Rule
85 Short 4 03/28/11 04/01/11 +0.08 +5.48 Exit Short Rule
86 Short 4 04/08/11 04/14/11 +0.08 +5.88 Exit Short Rule
87 Short 3 08/02/11 08/08/11 +0.33 +20.63 Exit Short Rule
88 Short 2 08/17/11 08/19/11 +0.02 +1.45 Exit Short Rule
89 Short 4 08/29/11 09/02/11 +0.07 +5.26 Exit Short Rule
90 Short 3 09/07/11 09/12/11 +0.03 +2.31 Exit Short Rule
91 Short 3 10/24/11 10/27/11 -0.01 -0.70 Exit Short Rule
92 Short 3 11/03/11 11/08/11 +0.01 +0.70 Exit Short Rule
93 Short 2 12/13/11 12/15/11 +0.12 +5.63 Exit Short Rule
94 Short 2 03/05/12 03/07/12 +0.09 +4.95 Exit Short Rule
95 Long 3 03/16/12 03/21/12 +0.25 +14.20 Exit Long Rule
96 Long 5 05/20/13 05/28/13 +0.98 +12.31 Exit Long Rule

Trading CVV CVD Equipment, a $9 stock, has also been effective.

TRADING CVV

Entry Exit
# Type Bars Date Date P&L Pts P&L % Reason for Exit
********************************************************

1 Short 3 12/27/11 12/30/11 +2.42 +10.50 Exit Short Rule
2 Short 3 02/28/12 03/02/12 +0.67 +3.37 Exit Short Rule
3 Short 6 05/24/12 06/04/12 -0.38 -3.15 Exit Short Rule
4 Short 3 07/03/12 07/09/12 +0.11 +0.86 Exit Short Rule
5 Long 5 08/17/12 08/24/12 +0.83 +8.26 Exit Long Rule
6 Short 4 09/25/12 10/01/12 +0.10 +1.02 Exit Short Rule
7 Short 2 10/05/12 10/09/12 +0.05 +0.51 Exit Short Rule
8 Long 6 01/09/13 01/17/13 +1.50 +15.17 Exit Long Rule
9 Short 3 02/14/13 02/20/13 +1.78 +15.01 Exit Short Rule
10 Short 3 04/30/13 05/03/13 +0.23 +2.21 Exit Short Rule
11 Short 1 05/28/13 05/28/13 0.00 0.00 Open

We also closed a 22% gain in Valeant Pharmaceutical, VRX, a position we held for only 4 trading days.

(click to enlarge)

We have new trading positions today:

NEW LONG POSITIONS:

ARNA Arena Pharmaceuticals 8.940 Flat Exit Long

BCS-PD Barclays APD 25.940 Flat Exit Long

CLH Clean Harbors 58.850 Flat Exit Long
CPA Copa Holdings SA-A 132.960 Flat Exit Long
EURARS=X Euro/Argentine Peso 6.771 Flat Exit Long
PG Proctor and Gamble Daily 80.860 Flat Exit Long
UAL United Continental Holdings 33.830 Flat Exit Long
VRX Valeant Pharmaceuticals 91.800 Flat Exit Long

AXPW AXION 0.260 Long Enter Long
CNTF China Tech-Faith Wireless 1.020 Long Enter Long
FOLD Amicus Therapeutics 3.440 Long Enter Long

CONTINUING LONG POSITIONS:
1398.HK Industrial and Commercial Bank of China 5.450 Long
3968.HK China Merchants' Bank 16.060 Long
3988.HK Bank of China 3.760 Long
^AORD All Ordinaries Australian Index 4,966.700 Long
^BKX Banking Index 61.680 Long
^DJI DOW JONES INDUSTRIAL AVERAGE 15,409.390 Long
^FCHI CAC French Index 4,050.560 Long
^FTSE FTSE Daily Index 6,762.010 Long
^GDAXI DAX German Index Daily 8,480.870 Long
^GSPC S&P 500 Index 1,660.060 Long
^HSI HANG SENG INDEX HONG KONG 22,779.779 Long
^OEX S&P 100 Index 747.090 Long
^SSMI Swiss Index Daily 8,221.220 Long
^TWII TAIWAN WEIGHTED INDEX 8,329.810 Long
^XOI Oil Stock Index 1,413.621 Long
AA ALCOA, Aluminum Company of America 8.590 Long
ACN Accenture PLC 83.090 Long
AMTD Ameritrade Corp 23.650 Long
BAC Bank of America Daily 13.350 Long
BLK BLACKROCK 288.320 Long
BSX Boston Scientific 9.220 Long
BWC BABCOCK & WILCOX 29.950 Long
BWLD Buffalo Wings 95.900 Long
C CIT Group Daily 51.790 Long
CA Computer Associates 27.650 Long
CAT Caterpillar 86.190 Long
CBI Chicago Bridge and iron 63.740 Long
CGW Global Water ETF 24.720 Long
CHG CH Energy 64.640 Long
CNYCHF=X Chinese Yuan/Swiss Franc 0.160 Long
CORT Corcept Therapeutics 1.900 Long
CPHD Cepheid 38.530 Long
DFS Discovery Financial Services 47.670 Long
DRR Short (Double Short) EURO ETF 44.910 Long
DV DeVry INC 31.180 Long
ETFC E-Trade Financial Daily 11.760 Long
EUFN Euorpean Financial Index 21.510 Long
EUO Short Euro ETF 19.800 Long
EURCHF=X Euro/Swiss Franc 1.256 Long
EURJPY=X Euro/Japanese Yen 131.558 Long
EWG Germany ETF 26.390 Long
EWM Malaysia Index ETF 16.410 Long
EWQ France ETF 25.460 Long
EWZ Brazil ETF 54.310 Long
F Ford Daily 15.280 Long
FDX Federal Express 96.530 Long
FFIV F5 Networks 83.670 Long
FLR Fluor Corp 64.260 Long
GD General Dynamics 77.870 Long
GES Guess? Inc 29.770 Long
GRES Global Resources 27.750 Long
GS Goldman Sachs Daily 160.700 Long
GT Goodyear Tires 14.920 Long
HAP Hard Asset Producers ETF 35.850 Long
HON Honeywell Daily 79.770 Long
HSIC Henry Schein 96.500 Long
IBM IBM Daily 207.780 Long
IDX Indonesian Index ETF 32.410 Long
IGT Intl Gaming Tech 18.810 Long
INTC Intel Daily 24.080 Long
IO Ion corp 6.600 Long
IYJ Dow Jones Industrial ETF 85.670 Long
JNJ Johnson and Johnson 87.610 Long
JNK Barclay's High-Yield Bond 41.160 Long
JOSB JOS A. Bank Clothiers 45.260 Long
KLAC KLA-Tenacor Corp 55.670 Long
LLL L3 Communications 85.540 Long
LMT Lockheed Martin 107.750 Long
LODE Comstock/Goldspring Mining 1.940 Long
MCD Mc Ddonalds Daily 101.240 Long
MDRX ALLSCRIPTS HEALTH SOLUTIONS 13.840 Long
MMM 3-M Daily 111.590 Long
MT Arcelor-Mittal Steel 12.890 Long
NVMI Nova Measuring Instruments 9.240 Long
PALL Palladium ETF 73.850 Long
PBTH PROLOR Biotech 6.380 Long
PNC PNC Financial Svc Daily 71.030 Long
POL PolyOne Corp 26.630 Long
PPS Post Properties REIT Retail 49.220 Long
RENN RenRen (China) 2.980 Long
ROP Roper Industries 126.330 Long
RUBCHF=X Russian Ruble/Swiss Franc 0.031 Long
SBUX Starbucks Daily 64.260 Long
SCHN Schnitzer Steel Indust 26.770 Long
SEA Global Shipping ETF 18.100 Long
SFL Ship Finance Intl. 17.690 Long
SLG SL Green Realty 90.430 Long
SLM Sallie Mae Daily 22.980 Long
SPY Spider S&P 500 ETF 166.300 Long
SSL Sassol Ltd S Africa 45.400 Long
STT State Street 67.150 Long
SWN Southwestern Energy Corp 38.610 Long
UBS UBS AG 17.820 Long
UDOW UP DOW ETF 90.260 Long
ULTA Ulta Salon (Cosmetics) 92.090 Long
UNH United Healthcare Daily 63.340 Long
UPS United Parcel Service Daily 86.750 Long
USDCHF=X US Dollar/Swiss Franc 0.977 Long
USDJPY=X USDollar/Japanese Yen 102.395 Long
UTX United Technologies Daily 95.970 Long
VNM Vietnam Market Vectors 21.370 Long
WFC Wells Fargo 40.520 Long
X US Steel Corp 18.470 Long
XLF Financial Sector ETF 19.931 Long
XME Spider Mining Metals ETF 38.180 Long
XOM Exxon Mobil Daily 92.380 Long
XOP Spider Oil Gas Exploration ETF 61.970 Long
XRT Retailers ETF 77.990 Long
YCS Short Japanese Yen 68.690 Long
YHOO Yahoo Inc. 26.070 Long

CONTINUING SHORT POSITIONS:
DOG Short Dow 30 ETF 28.779 Short
DUG Short Oil and Gas ETF Daily 15.230 Short
DXD Short Dow Industrial ETF 33.414 Short
EFZ Short MSCI EAPE Index ETF Daily 37.920 Short
ENZN Enzon Pharmaceutical 3.110 Short
EPV Short MSCI Europe ETF 21.430 Short
FXY Japanese Yen ETF Daily 95.750 Short
JBLU Jet Blue 6.290 Short
JPYCNY=X Japanese Yen/Chinese Yuan 0.060 Short
JPYINR=X Japanese Yen/Indian Rupee 0.548 Short
JPYRUB=X Japanese Yen/Russian Ruble 0.307 Short
RGRA RBS Rogers Enhanced Agriculture ETN 22.420 Short
SCC Short Consumer Services ETF Daily 25.780 Short
SDOW Short Dow ETF 39.900 Short
SGG Sugar ETF 59.850 Short
SKF Short Financials ETF Daily 22.398 Short
SMN Short Basic Materials 46.480 Short

NEW SHORT POSITIONS:
AMSC American Superconductor 2.920 Short Enter Short
ARUN Aruba Networks 13.720 Short Enter Short
ARX Aeroflex Holdings 7.700 Short Enter Short
BYD Boyd Gaming 13.190 Short Enter Short
CVV CVD Equipment 9.800 Short Enter Short
MSI Motorola Solutions 58.530 Short Enter Short
QLGC Q-Logic 9.540 Short Enter Short
RGRC RBS Rogers Enhanced Commodity ETN 23.710 Short Enter Short
SAN Banco Santander 7.150 Short Enter Short
SZK Short Consumer Goods 43.080 Short Enter Short

QLTI QLT Inc (Biotech) 7.930 Flat Exit Short

**************************************

The two new positions we like the best today are:

LONG FOLD, Amicus Therapeutics.

(click to enlarge)

SHORT, Q Logic, QLGC.

(click to enlarge)

As I have stated, we like a balanced portfolio of long and short positions.

Any one having questions about this trading system can contact me at the email below.

Michael J. Clark, CGTS

Hanoi

cgts@mindspring.com

NEW TRADING SYSTEM FOR SHORT-TERM TRADING OF INDEX AND STOCK OPTIONS

We are working on developing new trading systems all the time. Our stable of systems is working very well today. One time-duration system we have long been trying to master is the very short-term. That is: 3-10 days. Our goal is to be able to trade very short-duration trades for consistent gains. This means we seek trading systems in the 90% accuracy range.

We have taken one of our most description momentum indicators (two indications fused together -- M5D and CGTS), shrunk it into a tiny time-frame oscillator, and have begun testing it as a trading indicator.

Let's look at these two indicators in a chart of Apple Computer. The red line in the central pane is the M5D/CGTSD Tester, which we then shrank into the brown line oscillator in the bottom pane.

What does this do for us? Well, it gives us, perhaps, oversold and overbought levels that we might be able to use trading. Of course, we only want to play moves that correspond to the trend. That is, we want to buy only those issues in an uptrend; and we want to short only those issues in a downtrend.

The very short-term trend is shown in the top pane. For trading we want to use longer-term trends as well, which are also shown in the chart below, short-term to longer-term. In the chart-below, AAPL is bullish (dates are from May 2012 through August 2012.

(click to enlarge)

What about the oscillator? Does it track trading lows and highs? It is hard to tell by just looking.

If we set trading parameters and then run a test, we are told how well this indicator tracks trading highs and lows. Setting these parameters takes much time, and much testing. Then we are not always sure what we have until we actually trade the system.

(click to enlarge)

Right away, this system looks hopeful. Gains of over 10 points, over 11 points, over 21 points, and a loss of .13 points.

(click to enlarge)This system, as traded, has a 93.7% accuracy rate, over 254 trades. 238 winning trades; 16 losing trades (8 long and 8 short).

The trading record below (starting in 1984) show the position bias (short or long), the length of the trade, the dates of the trade in question, point gain or loss, percentage gain or loss. The first trade was a short trade held for 5 trading days, resulting in a gain of 6.39%. All the trades are listed below.

It is not so likely that a .81 point gain in five days holding long options of AAPL in 1984 will make you smile. As AAPL becomes a more expensive stock, notice how the gains begin to swell, in terms of points, not percentages.

Entry Exit
# Type Bars Date Date P&L Pts P&L % Reason for Exit
________________________________________________________
1 Short 5 10/04/84 10/11/84 +0.81 +6.39 Exit Short Rule
2 Long 3 01/08/85 01/11/85 +0.88 +6.25 Exit Long Rule
3 Short 4 02/22/85 02/28/85 +1.44 +10.39 Exit Short Rule
4 Short 3 03/21/85 03/26/85 +0.06 +0.53 Exit Short Rule
5 Long 3 05/14/85 05/17/85 +1.00 +10.13 Exit Long Rule
6 Long 3 06/17/85 06/20/85 +0.43 +5.85 Exit Long Rule
7 Short 5 07/10/85 07/17/85 +0.19 +2.11 Exit Short Rule
8 Long 12 08/22/85 09/10/85 +0.25 +3.36 Exit Long Rule
9 Long 2 10/29/85 10/31/85 +0.38 +4.20 Exit Long Rule
10 Long 4 12/23/85 12/30/85 +0.19 +1.74 Exit Long Rule
11 Long 6 02/11/86 02/20/86 +0.62 +5.24 Exit Long Rule
12 Long 3 04/14/86 04/17/86 +1.06 +7.93 Exit Long Rule
13 Long 3 04/23/86 04/28/86 +1.19 +8.04 Exit Long Rule
14 Long 4 05/16/86 05/22/86 +0.38 +2.08 Exit Long Rule
15 Long 7 10/03/86 10/14/86 +0.12 +0.74 Exit Long Rule
16 Long 2 01/13/87 01/15/87 +2.62 +11.76 Exit Long Rule
17 Short 4 05/14/87 05/20/87 +2.38 +5.99 Exit Short Rule
18 Short 3 06/12/87 06/17/87 +19.25 +48.73 Exit Short Rule
19 Short 5 06/22/87 06/29/87 +0.62 +2.98 Exit Short Rule
20 Short 3 07/06/87 07/09/87 +1.50 +7.36 Exit Short Rule
21 Long 3 08/27/87 09/01/87 +0.25 +0.96 Exit Long Rule
22 Short 4 01/05/88 01/11/88 +1.07 +4.77 Exit Short Rule
23 Long 3 02/08/88 02/11/88 +0.94 +4.85 Exit Long Rule
24 Long 6 02/24/88 03/03/88 +2.12 +10.06 Exit Long Rule
25 Short 4 05/13/88 05/19/88 +0.75 +3.70 Exit Short Rule
26 Long 5 06/16/88 06/23/88 +0.25 +1.12 Exit Long Rule
27 Long 2 06/27/88 06/29/88 +0.94 +4.22 Exit Long Rule
28 Short 4 07/18/88 07/22/88 +1.50 +6.59 Exit Short Rule
29 Short 3 08/18/88 08/23/88 +1.50 +7.06 Exit Short Rule
30 Long 3 12/12/88 12/15/88 +0.50 +2.60 Exit Long Rule
31 Long 6 12/27/88 01/05/89 +0.88 +4.32 Exit Long Rule
32 Long 5 01/10/89 01/17/89 -1.12 -5.28 Exit Long Rule
33 Short 6 02/16/89 02/27/89 -0.06 -0.33 Exit Short Rule
34 Long 4 04/04/89 04/10/89 +1.25 +7.25 Exit Long Rule
35 Long 8 04/21/89 05/03/89 +0.06 +0.30 Exit Long Rule
36 Long 5 05/18/89 05/25/89 +1.75 +7.82 Exit Long Rule
37 Long 7 06/05/89 06/14/89 +1.32 +5.60 Exit Long Rule
38 Short 4 06/23/89 06/29/89 +1.62 +7.41 Exit Short Rule
39 Short 2 07/17/89 07/19/89 +0.12 +0.61 Exit Short Rule
40 Long 5 08/29/89 09/06/89 +0.31 +1.40 Exit Long Rule
41 Long 7 09/27/89 10/06/89 +1.69 +7.55 Exit Long Rule
42 Short 5 11/20/89 11/28/89 +0.56 +2.48 Exit Short Rule
43 Short 3 12/04/89 12/07/89 +1.25 +5.52 Exit Short Rule
44 Long 2 01/24/90 01/26/90 -0.62 -3.68 Exit Long Rule
45 Long 5 02/23/90 03/02/90 +0.25 +1.50 Exit Long Rule
46 Long 3 06/18/90 06/21/90 +1.32 +6.70 Exit Long Rule
47 Long 3 07/05/90 07/10/90 +1.75 +8.05 Exit Long Rule
48 Short 2 09/17/90 09/19/90 +0.62 +3.70 Exit Short Rule
49 Long 3 10/29/90 11/01/90 +0.31 +2.11 Exit Long Rule
50 Long 3 11/29/90 12/04/90 +0.88 +4.76 Exit Long Rule
51 Long 6 12/28/90 01/08/91 +0.12 +0.58 Exit Long Rule
52 Long 5 06/28/91 07/08/91 +2.62 +12.65 Exit Long Rule
53 Short 5 09/09/91 09/16/91 +3.00 +11.27 Exit Short Rule
54 Short 2 10/22/91 10/24/91 +1.18 +4.35 Exit Short Rule
55 Long 3 12/20/91 12/26/91 +2.32 +9.21 Exit Long Rule
56 Long 2 01/16/92 01/20/92 +0.62 +1.99 Exit Long Rule
57 Long 4 01/29/92 02/04/92 +1.25 +3.95 Exit Long Rule
58 Short 9 03/17/92 03/30/92 +2.38 +7.55 Exit Short Rule
59 Short 3 04/06/92 04/09/92 +1.75 +5.76 Exit Short Rule
60 Short 4 05/27/92 06/02/92 +1.88 +6.22 Exit Short Rule
61 Short 3 06/12/92 06/17/92 +3.57 +13.05 Exit Short Rule
62 Short 8 08/13/92 08/25/92 +0.18 +0.83 Exit Short Rule
63 Long 2 09/11/92 09/15/92 +0.31 +1.30 Exit Long Rule
64 Short 2 09/21/92 09/23/92 -0.50 -2.15 Exit Short Rule
65 Long 3 11/03/92 11/06/92 +1.88 +7.21 Exit Long Rule
66 Long 3 11/17/92 11/20/92 +1.12 +4.07 Exit Long Rule
67 Short 8 01/25/93 02/04/93 +0.25 +0.83 Exit Short Rule
68 Short 5 02/18/93 02/25/93 +0.12 +0.45 Exit Short Rule
69 Short 3 03/25/93 03/30/93 +1.25 +4.57 Exit Short Rule
70 Short 3 04/12/93 04/15/93 +1.38 +5.50 Exit Short Rule
71 Long 4 04/23/93 04/29/93 +0.75 +3.05 Exit Long Rule
72 Long 6 05/12/93 05/20/93 +2.75 +10.33 Exit Long Rule
73 Short 5 05/27/93 06/04/93 +1.31 +4.56 Exit Short Rule
74 Short 3 07/12/93 07/15/93 +1.12 +5.92 Exit Short Rule
75 Long 7 07/21/93 07/30/93 +0.75 +5.71 Exit Long Rule
76 Short 3 08/23/93 08/26/93 +0.75 +5.29 Exit Short Rule
77 Short 6 09/07/93 09/15/93 +0.88 +6.67 Exit Short Rule
78 Short 4 10/05/93 10/11/93 -0.12 -1.06 Exit Short Rule
79 Short 3 11/24/93 11/30/93 +0.75 +4.55 Exit Short Rule
80 Short 4 12/06/93 12/10/93 +2.00 +12.40 Exit Short Rule
81 Short 3 01/10/94 01/13/94 +1.51 +8.95 Exit Short Rule
82 Long 3 02/18/94 02/24/94 +0.19 +1.05 Exit Long Rule
83 Long 4 03/02/94 03/08/94 +0.68 +3.85 Exit Long Rule
84 Short 6 04/05/94 04/13/94 +0.88 +5.22 Exit Short Rule
85 Long 5 07/01/94 07/11/94 +0.62 +4.85 Exit Long Rule
86 Long 4 09/01/94 09/08/94 +0.57 +3.23 Exit Long Rule
87 Long 3 09/14/94 09/19/94 +0.18 +1.05 Exit Long Rule
88 Short 3 11/29/94 12/02/94 +0.84 +4.42 Exit Short Rule
89 Short 3 12/06/94 12/09/94 +0.66 +3.49 Exit Short Rule
90 Long 2 12/16/94 12/20/94 +0.62 +3.36 Exit Long Rule
91 Long 4 01/03/95 01/09/95 +1.41 +7.35 Exit Long Rule
92 Short 3 01/18/95 01/23/95 +1.69 +7.41 Exit Short Rule
93 Short 4 03/09/95 03/15/95 +2.38 +11.95 Exit Short Rule
94 Short 2 04/03/95 04/05/95 +0.38 +2.11 Exit Short Rule
95 Long 3 04/27/95 05/02/95 +0.12 +0.66 Exit Long Rule
96 Long 3 05/19/95 05/24/95 +0.38 +1.75 Exit Long Rule
97 Long 5 06/14/95 06/21/95 +2.88 +13.18 Exit Long Rule
98 Short 6 09/05/95 09/13/95 +0.56 +2.57 Exit Short Rule
99 Short 3 10/02/95 10/05/95 +0.57 +3.00 Exit Short Rule
100 Short 2 01/03/96 01/05/96 -1.06 -6.60 Exit Short Rule
101 Short 3 01/16/96 01/19/96 +2.35 +13.57 Exit Short Rule
102 Short 3 03/18/96 03/21/96 +0.50 +3.83 Exit Short Rule
103 Short 3 04/16/96 04/19/96 +0.41 +3.13 Exit Short Rule
104 Short 4 06/13/96 06/19/96 +0.75 +6.09 Exit Short Rule
105 Long 3 08/15/96 08/20/96 +0.62 +5.62 Exit Long Rule
106 Long 4 10/31/96 11/06/96 +1.25 +10.87 Exit Long Rule
107 Short 5 12/02/96 12/09/96 +0.06 +0.48 Exit Short Rule
108 Short 5 12/23/96 12/31/96 +1.19 +10.24 Exit Short Rule
109 Short 2 01/03/97 01/07/97 +2.12 +19.54 Exit Short Rule
110 Short 4 01/10/97 01/16/97 +0.75 +8.22 Exit Short Rule
111 Short 4 01/21/97 01/27/97 +0.31 +3.65 Exit Short Rule
112 Long 4 03/24/97 03/31/97 +0.88 +10.61 Exit Long Rule
113 Short 3 04/17/97 04/22/97 +0.25 +2.63 Exit Short Rule
114 Short 3 05/27/97 05/30/97 +0.31 +3.65 Exit Short Rule
115 Long 2 07/10/97 07/14/97 +1.19 +17.96 Exit Long Rule
116 Long 3 10/01/97 10/06/97 +0.21 +1.90 Exit Long Rule
117 Long 3 10/08/97 10/13/97 +0.60 +5.53 Exit Long Rule
118 Short 7 11/14/97 11/25/97 +0.54 +5.80 Exit Short Rule
119 Long 6 03/17/98 03/25/98 +0.41 +3.11 Exit Long Rule
120 Long 3 06/15/98 06/18/98 -0.10 -0.69 Exit Long Rule
121 Long 3 06/19/98 06/24/98 +0.60 +4.40 Exit Long Rule
122 Long 2 08/20/98 08/24/98 +0.28 +1.38 Exit Long Rule
123 Short 2 10/14/98 10/16/98 +0.35 +1.85 Exit Short Rule
124 Short 2 10/22/98 10/26/98 -0.34 -1.88 Exit Short Rule
125 Short 2 02/01/99 02/03/99 +0.38 +1.83 Exit Short Rule
126 Short 3 03/08/99 03/11/99 +1.10 +6.37 Exit Short Rule
127 Long 2 07/13/99 07/15/99 -0.22 -0.82 Exit Long Rule
128 Long 3 08/19/99 08/24/99 +0.82 +2.77 Exit Long Rule
129 Long 3 10/26/99 10/29/99 +2.53 +6.74 Exit Long Rule
130 Long 4 11/18/99 11/24/99 +2.53 +5.66 Exit Long Rule
131 Short 3 01/26/00 01/31/00 +3.22 +5.84 Exit Short Rule
132 Short 3 03/10/00 03/15/00 +4.75 +7.55 Exit Short Rule
133 Short 3 04/28/00 05/03/00 +4.50 +7.25 Exit Short Rule
134 Long 3 06/15/00 06/20/00 +4.44 +9.61 Exit Long Rule
135 Long 4 07/05/00 07/11/00 +2.65 +10.28 Exit Long Rule
136 Long 2 01/26/01 01/30/01 +1.10 +11.20 Exit Long Rule
137 Short 3 02/15/01 02/21/01 +0.59 +5.93 Exit Short Rule
138 Short 3 07/03/01 07/09/01 +0.57 +4.78 Exit Short Rule
139 Short 3 08/13/01 08/16/01 +0.22 +2.30 Exit Short Rule
140 Long 3 11/12/01 11/15/01 +0.35 +3.73 Exit Long Rule
141 Long 6 11/16/01 11/27/01 +1.02 +10.70 Exit Long Rule
142 Short 2 01/15/02 01/17/02 -0.39 -3.59 Exit Short Rule
143 Short 4 02/13/02 02/20/02 +0.94 +7.52 Exit Short Rule
144 Long 2 04/03/02 04/05/02 +0.49 +4.17 Exit Long Rule
145 Long 3 07/02/02 07/08/02 +0.54 +6.32 Exit Long Rule
146 Short 2 07/16/02 07/18/02 +1.43 +16.07 Exit Short Rule
147 Long 3 08/13/02 08/16/02 +0.61 +8.36 Exit Long Rule
148 Short 4 09/25/02 10/01/02 +0.21 +2.81 Exit Short Rule
149 Short 2 12/17/02 12/19/02 +0.44 +5.84 Exit Short Rule
150 Short 2 12/26/02 12/30/02 +0.17 +2.29 Exit Short Rule
151 Short 3 02/28/03 03/05/03 +0.20 +2.60 Exit Short Rule
152 Short 6 04/02/03 04/10/03 +0.12 +1.58 Exit Short Rule
153 Long 3 06/24/03 06/27/03 -0.03 -0.27 Exit Long Rule
154 Long 4 06/27/03 07/03/03 +0.20 +2.14 Exit Long Rule
155 Long 6 07/10/03 07/18/03 +0.64 +6.54 Exit Long Rule
156 Long 3 08/11/03 08/14/03 +0.15 +1.58 Exit Long Rule
157 Long 4 08/15/03 08/21/03 +0.98 +9.99 Exit Long Rule
158 Long 4 08/25/03 08/29/03 +0.88 +8.39 Exit Long Rule
159 Long 6 09/05/03 09/15/03 -0.14 -1.29 Exit Long Rule
160 Long 2 10/02/03 10/06/03 +0.86 +8.36 Exit Long Rule
161 Short 6 10/28/03 11/05/03 +0.34 +2.91 Exit Short Rule
162 Short 3 11/06/03 11/11/03 +0.79 +6.83 Exit Short Rule
163 Long 3 12/22/03 12/26/03 +0.46 +4.69 Exit Long Rule
164 Long 4 03/31/04 04/06/04 +0.39 +2.92 Exit Long Rule
165 Long 6 05/17/04 05/25/04 +0.88 +6.64 Exit Long Rule
166 Long 4 09/13/04 09/17/04 +0.77 +4.36 Exit Long Rule
167 Long 4 11/09/04 11/15/04 +0.60 +2.20 Exit Long Rule
168 Long 5 01/03/05 01/10/05 +2.83 +8.96 Exit Long Rule
169 Long 4 02/10/05 02/16/05 +5.88 +15.02 Exit Long Rule
170 Short 2 06/09/05 06/13/05 +1.75 +4.65 Exit Short Rule
171 Long 2 06/14/05 06/16/05 +1.98 +5.50 Exit Long Rule
172 Long 8 07/29/05 08/10/05 +0.73 +1.71 Exit Long Rule
173 Long 9 08/18/05 08/31/05 +0.59 +1.27 Exit Long Rule
174 Long 4 09/14/05 09/20/05 +3.58 +7.22 Exit Long Rule
175 Long 4 10/28/05 11/03/05 +7.38 +13.55 Exit Long Rule
176 Long 4 11/08/05 11/14/05 +1.55 +2.59 Exit Long Rule
177 Long 3 12/29/05 01/04/06 +3.52 +4.93 Exit Long Rule
178 Long 2 04/04/06 04/06/06 +10.07 +16.46 Exit Long Rule
179 Long 3 04/24/06 04/27/06 +3.61 +5.49 Exit Long Rule
180 Short 5 06/22/06 06/29/06 +0.61 +1.02 Exit Short Rule
181 Long 3 08/11/06 08/16/06 +4.33 +6.80 Exit Long Rule
182 Long 5 08/21/06 08/28/06 +0.42 +0.63 Exit Long Rule
183 Long 5 08/29/06 09/06/06 +3.55 +5.34 Exit Long Rule
184 Long 2 09/19/06 09/21/06 +0.88 +1.19 Exit Long Rule
185 Long 3 09/22/06 09/27/06 +3.41 +4.67 Exit Long Rule
186 Long 8 10/27/06 11/08/06 +2.04 +2.54 Exit Long Rule
187 Short 6 11/29/06 12/07/06 +4.76 +5.19 Exit Short Rule
188 Short 2 12/11/06 12/13/06 -0.30 -0.34 Exit Short Rule
189 Short 3 02/07/07 02/12/07 +1.27 +1.47 Exit Short Rule
190 Long 3 02/16/07 02/22/07 +4.68 +5.52 Exit Long Rule
191 Long 4 04/18/07 04/24/07 +2.84 +3.14 Exit Long Rule
192 Long 5 05/16/07 05/23/07 +5.55 +5.17 Exit Long Rule
193 Long 4 05/24/07 05/31/07 +10.50 +9.49 Exit Long Rule
194 Long 4 06/26/07 07/02/07 +1.61 +1.35 Exit Long Rule
195 Short 3 08/07/07 08/10/07 +10.03 +7.43 Exit Short Rule
196 Long 3 10/04/07 10/09/07 +11.62 +7.44 Exit Long Rule
197 Long 5 10/11/07 10/18/07 +11.27 +6.95 Exit Long Rule
198 Long 3 12/03/07 12/06/07 +11.09 +6.20 Exit Long Rule
199 Short 5 01/10/08 01/17/08 +17.13 +9.62 Exit Short Rule
200 Short 5 01/31/08 02/07/08 +14.12 +10.43 Exit Short Rule
201 Long 2 03/17/08 03/19/08 +2.94 +2.32 Exit Long Rule
202 Short 2 05/16/08 05/20/08 +1.72 +0.92 Exit Short Rule
203 Short 2 06/25/08 06/27/08 +7.30 +4.12 Exit Short Rule
204 Short 4 07/30/08 08/05/08 -0.76 -0.48 Exit Short Rule
205 Short 6 08/22/08 09/02/08 +10.60 +6.00 Exit Short Rule
206 Short 3 11/04/08 11/07/08 +12.75 +11.49 Exit Short Rule
207 Long 2 12/31/08 01/05/09 +9.23 +10.81 Exit Long Rule
208 Long 4 01/30/09 02/05/09 +6.33 +7.02 Exit Long Rule
209 Short 8 02/25/09 03/09/09 +8.05 +8.83 Exit Short Rule
210 Long 4 03/30/09 04/03/09 +11.50 +11.01 Exit Long Rule
211 Long 3 05/21/09 05/27/09 +8.87 +7.14 Exit Long Rule
212 Long 6 08/06/09 08/14/09 +2.87 +1.75 Exit Long Rule
213 Long 3 09/02/09 09/08/09 +7.75 +4.69 Exit Long Rule
214 Long 8 09/25/09 10/07/09 +7.88 +4.32 Exit Long Rule
215 Long 3 10/16/09 10/21/09 +16.87 +8.97 Exit Long Rule
216 Long 5 12/15/09 12/22/09 +6.19 +3.19 Exit Long Rule
217 Long 6 01/07/10 01/15/10 -4.65 -2.21 Exit Long Rule
218 Long 2 01/15/10 01/20/10 +5.79 +2.81 Exit Long Rule
219 Long 5 02/19/10 02/26/10 +2.95 +1.46 Exit Long Rule
220 Long 3 03/19/10 03/24/10 +7.12 +3.20 Exit Long Rule
221 Long 3 04/19/10 04/22/10 +19.40 +7.85 Exit Long Rule
222 Short 3 08/04/10 08/09/10 +1.23 +0.47 Exit Short Rule
223 Long 4 08/27/10 09/02/10 +10.55 +4.37 Exit Long Rule
224 Long 9 09/28/10 10/11/10 +8.50 +2.96 Exit Long Rule
225 Long 5 11/30/10 12/07/10 +7.06 +2.27 Exit Long Rule
226 Long 3 12/30/10 01/04/11 +7.63 +2.36 Exit Long Rule
227 Long 3 01/28/11 02/02/11 +8.22 +2.45 Exit Long Rule
228 Short 3 03/14/11 03/17/11 +18.96 +5.36 Exit Short Rule
229 Short 3 04/13/11 04/18/11 +4.28 +1.27 Exit Short Rule
230 Short 7 05/04/11 05/13/11 +9.07 +2.59 Exit Short Rule
231 Short 9 05/25/11 06/08/11 +4.54 +1.35 Exit Short Rule
232 Short 3 06/14/11 06/17/11 +12.18 +3.66 Exit Short Rule
233 Long 4 07/12/11 07/18/11 +20.05 +5.67 Exit Long Rule
234 Long 4 09/01/11 09/08/11 +3.11 +0.82 Exit Long Rule
235 Long 4 09/09/11 09/15/11 +15.48 +4.10 Exit Long Rule
236 Short 4 10/27/11 11/02/11 +7.28 +1.80 Exit Short Rule
237 Short 3 11/08/11 11/11/11 +21.61 +5.32 Exit Short Rule
238 Long 9 12/07/11 12/21/11 +7.36 +1.89 Exit Long Rule
239 Long 3 02/16/12 02/22/12 +10.83 +2.16 Exit Long Rule
240 Long 7 03/05/12 03/14/12 +56.42 +10.58 Exit Long Rule
241 Long 3 03/30/12 04/04/12 +24.76 +4.13 Exit Long Rule
242 Short 4 04/18/12 04/24/12 +48.06 +7.90 Exit Short Rule
243 Short 3 05/10/12 05/15/12 +17.35 +3.04 Exit Short Rule
244 Long 6 06/01/12 06/11/12 +10.18 +1.81 Exit Long Rule
245 Long 5 06/12/12 06/19/12 +11.25 +1.95 Exit Long Rule
246 Long 4 06/25/12 07/02/12 +21.75 +3.81 Exit Long Rule
247 Long 7 07/11/12 07/20/12 -0.13 -0.02 Exit Long Rule
248 Long 3 08/30/12 09/05/12 +6.36 +0.96 Exit Long Rule
249 Long 4 09/10/12 09/14/12 +28.54 +4.31 Exit Long Rule
250 Short 4 10/16/12 10/22/12 +15.76 +2.43 Exit Short Rule
251 Long 2 11/16/12 11/20/12 +33.24 +6.30 Exit Long Rule
252 Short 5 11/29/12 12/06/12 +42.12 +7.15 Exit Short Rule
253 Short 3 12/18/12 12/21/12 +13.73 +2.57 Exit Short Rule
254 Short 4 04/10/13 04/16/13 +9.45 +2.17 Exit Short Rule

In the last six trades we see gains of 29, 16, 33, 42, 14, and 10 points. A gain of 33 points in two trading days from 11/16/12 to 11/20/12 is noteworthy.

Options pricing is tricky. I believe options are priced to favor the seller -- options are often quite expensive. Also the gain on an options trade is often less than par vis-a-vis the underlying issue trade. In other words, the 33 point gain in the stock AAPL may not show a full 33 point gain in the options trading. Why not? The derivative market is not well regulated. Options are not always liquid; and bid and ask prices sometimes have major gaps. I have not studied the options market well enough to say why. I have traded options very often, and I have been disappointed more than a few times. However, a gain of 33 points in two trading day in the underlying issue seems like a significant gain.

We received a buy signal using this trading system over the weekend on the British FTSE Index. The index did not trade on Monday. The FTSE is up 1 1/2% in early trading Tuesday.

(click to enlarge)

Here are the other weekend trading signals for this system:

^FTSE FTSE Daily Index 6,654.340 Enter Long
ARO Aeropostale Daily 14.760 Enter Long
DRR Short (Double Short) EURO ETF 44.428 Enter Long
GES Guess? Inc 29.550 Enter Long
JOSB JOS A. Bank Clothiers 45.360 Enter Long
LODE Comstock/Goldspring Mining 1.940 Enter Long
RUBCHF=X Russian Ruble/Swiss Franc 0.031 Enter Long
SWN Southwestern Energy Corp 38.080 Enter Long
UNH United Healthcare Daily 62.060 Enter Long
USDCHF=X US Dollar/Swiss Franc 0.961 Enter Long
XRT Retailers ETF 77.590 Enter Long

HPQ Hewlett Packard Daily 24.210 Exit Long
P Pandora 16.430 Exit Long

BSAC Banco Santander Chile SA 25.610 Exit Short
GGB GERDAU S.A. 6.510 Exit Short
KOL Coal ETF 21.200 Exit Short
RGRC RBS Rogers Enhanced Commodity ETN 23.620 Exit Short
SAN Banco Santander 6.970 Exit Short
SCCO Southern Copper 31.460 Exit Short
SLX Steel ETF 41.670 Exit Short
SNP China Petrol & Chemical Co 106.090 Exit Short
VALE VALE S.A. 15.510 Exit Short

JBLU Jet Blue 6.380 Enter Short
SGG Sugar ETF 60.220 Enter Short
SZK Short Consumer Goods 43.080 Enter Short

The HPQ trades returned an average gain of 10.155 points on the last four trades shown in the chart, over an average of 4.75 days.

549 Long 5 02/15/13 02/25/13 +2.28 +13.58 Exit Long Rule
550 Long 4 03/21/13 03/27/13 +1.26 +5.65 Exit Long Rule
551 Short 3 04/09/13 04/12/13 +1.32 +5.94 Exit Short Rule
552 Long 7 05/15/13 05/24/13 +3.24 +15.45 Exit Long Rule

(click to enlarge)

This type of trading will not appeal to everyone. Afterall, the market is rising magically. Buying-and-holding will return even more, one might argue. But the juicing of the markets with taxpayer money cannot go on for ever. When stock prices start to fall they will fall quickly, especially with all the margin in the market. Margin calls will exacerbate the decline.

The beauty of options is the leverage. Buying a few call or put options can, in some cases, cover hundreds of shares of a stock and the initial outlay -- of course there is a time limit on this 'possession' of the shares of the stock. Also, the most you can lose on a straight option purchase is the cost of the option(s). One can lose all of this initial outlay if the market moves against one's position. This is why the accuracy is so important. The short-duration of the trades helps one to get out of a reversal/loss fairly quickly.

Options can be frustrating, because pricing is sometimes a mystery, especially in illiquid options.

Test Range: 1/9/62 to 5/24/13 Trading HPQ

Net P&L: 1,195.56
Percent Net P&L: 3,502.96%

Number of Trades: 552
Average P&L per Trade: 2.17
Percent Winning Trades: 95.11%

Total Days in Test: 12908
Percent Days in Market: 18.52%
Average P&L per Day: 0.09

Max Drawdown: 4.94
Reward/Risk Ratio: 242.016

Buy & Hold P&L: -9.92
vs. B&H P&L: 1,205.48
vs. B&H Percent P&L: 3,532.02%
vs. B&H Reward/Risk Ratio: 242.085

Current Position: Flat
Open Trade P&L: 0.00
Traded Last Day: Exit Long

5 dates at the beginning of this quote file were excluded from the test range because this trading model requires 5 data points before the first value can be calculated.

The SCCO short-covering signal (above) returned the following results in the last five trades:

164 Short 12 02/01/13 02/20/13 +2.35 +5.90 Exit Short Rule
165 Short 4 02/26/13 03/04/13 +0.16 +0.43 Exit Short Rule
166 Short 4 03/08/13 03/14/13 +0.89 +2.35 Exit Short Rule
167 Short 4 04/10/13 04/16/13 +3.45 +9.52 Exit Short Rule
168 Short 5 05/17/13 05/24/13 +1.60 +4.84 Exit Short Rule

I recommend anyone using this system as a trading system to balance a portfolio of long and short trades at the same time. For instance, from this weekend package of signals, one might buy FTSE calls and Jet Blue puts as a way of hedging the general market moves.

This system also allows for the buying of the most near-term expiration options, June, which are the cheapest, since they expire relatively quickly. But this system generally does not require much time.

I am planning to resurrect my CGTS Newsletter, with daily transmission of trading signals. Those interested can contact me. One should be a short-term trader to use this newsletter data effectively. I will not start this up for a few weeks. I want to test this new trading system for a few more weeks to see if it is as good as it seems to be.

Best trading.

Michael J. Clark, CGTS

Hanoi

cgts@mindspring.com

ARE WE TOPPING?

Can anything make these stocks go down? Well, Bernanke's 'call' might make stocks go down -- his call on tapering off QE. In my last post I talked about how the strong US Dollar was not healthy for the illusions of global recovery.

Not everything is well with this market. First, let's look at the NDX, the Nasdaq 100 Index, which looks to be getting ready to take a header.

We introduced our Pulse Indicator a month or so ago. The Pulse Indicator -- red line below, top pane -- vanishes as buyers vanish; it turns down to zero. The pulse of the NDX just vanished. One must also be aware of the trends in the bottom pane. The pulse can vanish is a minor pullback, for a very short time, and then reappear again when the rally continues. The NDX is showing a pulse vanishing and a trend downturn. This has been a very negative combination two other times since September 2012, as shown in the chart.

(click to enlarge)

The strength of the US Dollar has disrupted Ben Bernanke's ruse. The ruse is that the global economy is recovering. The truth is that central banks know how to inflate assets (primary by weakening the US Dollar, and thereby inflating assets priced in Dollars -- a method of raising all boats but the Dollar). Central banks do not know how to create organic growth periods in economies. This is primarily so because the central banks only believe one side of the coin exists, more and more credit, more and more debt. To accept Deflation as an equal partner with Inflation is against the ethics of central banks, whose job is to perpetuate perennial economic growth through manipulation of monetary policy. Without a weak Dollar, Bernanke's ruse expires. Commodities sink; US housing sinks; and eventually stocks also sink.

Japan, by triggering massive currency devaluation around the world, is accelerating the fall of Ben Bernanke. It is a race to the bottom now, as all other nations of the world join the Currency War started by Ben Bernanke, the UK, and Switzerland. Why did it take Japan so long? Currency War; Trade War; perhaps then actual military war. These are all things that TOO MUCH DEBT unfurls.

(click to enlarge)

A decline in commodity price sis fueled by a stronger US Dollar, and is a sign that the so-called global recovery is a false commodity.

(click to enlarge)

Stocks to consider shorting? If you want to look at stocks to short, if you are convinced this is the market top about which we have been continually warned, here are some.

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Housing stocks have been stellar performers. But this is an artificial market, because of the Fed's intrusion into the picture, guaranteeing the continuation of bad mortgages in order to fake a housing rally. Propaganda. Mortgage REIT's look horrible; and lumber has broken down. DHI, below, also appears to be breaking down.

(click to enlarge)

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The Nikkei Japanese Index closed down 3 1/2% on Monday. Tyler Durden writes in Zero Hedge today that turmoil in the Japanese bond market is exemplified in the number of JGB Repo 'fails' -- where a repo agreement breaks down, has gone up sharply.

Durden writes:

Until the last few days, the attention of the mainstream business media has been on how 'wonderful' Japan's policy prescription must be since its stock market is soaring at a record pace. The reality is that the far bigger JGB market has been crumbling. As we explained here, this is a major problem for the bubble-blowers, as the extreme volatility (VaR shock) that the Japanese Government Bond market has been through in the last few weeks has some very large and painful consequences, that as yet, have not been discussed widely. The term 'shadow banking' has been one ZH readers are by now extremely familiar with as we have discussed this as the panacea of unseen leverage (most recently in Europe and China) for years; the funding markets in Japan, so heavily reliant on JGB repo for short-term liquidity and the efficient functioning of two-way markets in the bonds, are hitting a wall. As JPMorgan notes, the number of JGB 'fails' - where a repo deal breaks down - has more than doubled in the last week. For a market that represents 40% of the total Japanese money-market, this will be a critical area to watch for a JGB waterfall.

Durden quotes from a JP Morgan report:

The sharp rise in JGB volatility has not left the JGB repo market unaffected. The ¥80tr large Japanese repo market accounts for 40% of the total size of Japanese money market (which it also includes CDs/CPs, currency swaps, BoJ money market operations, and Call transactions) and it is an important lubricant of the JGB market. This is because repos with JGBs as collateral, account for more than 99% of domestic repo transactions. The haircuts are typically very low in the JGB repo market ranging from zero to 2%. This is because market participants are comfortable or accustomed to control risks through margin calls without often setting a haircut upfront.

But these margin calls or haircuts where applicable, tend to rise when volatility rises. And the rise in margin calls or haircuts has caused a rise in "fails". 175 fails in the month of April represents a sharp increase from March but it is still much lower from the >1000 figures seen immediately post Lehman. A fail is a situation where a recipient of JGBs in a transaction does not receive the JGBs from the delivering party on the scheduled settlement date.

Typically the number of fails in Japan is quite small, partly because market participants try to avoid fails in advance, and because some market participants have never experienced fails. According to the BoJ, the situation is quite different from that prevailing in US repo markets, where fails occur much more frequently than in Japan and where market participants take action in accordance with the fails practice on a daily basis.

The retrenchment in Japanese repo market is then fed into the JGB market propagating the initial volatility (VaR) shock. The repo market is used by market participants for funding or short selling and its functioning is important in maintaining a two-way market for JGBs.

http://www.zerohedge.com/news/2013-05-26/chart-boj-most-worried-about-and-so-should-you-be

In yesterday's extra long post I wrote about the possibility that 10-year TBond rates hitting 2.2% could trigger a crisis in America's TBond market also, with much selling in an attempt to hedge against chaos triggered by rising rates in the MBS market.

It looks and feels like a top here. Of course, I have learned not to underestimate what Big Guns (a lot of money) and not much ethics can do to control financial markets -- so I'm watching anxiously also, uncertain of what new derangement of which central banks might be capable.

Michael J. Clark, CGTS

Hanoi

cgts@mindspring.com