Yesterday we looked at our EMV Trading System's daily report. Today, let's look at our daily CGTS PROP 10 TRADING SYSTEM. We are still testing this system. As we said yesterday, using the PROP 10 System, issues giving a PROP reading of -7 or above are potential buys; those giving a PROP reading of less than -7 are potential sells.
Our PROP 10 trading system requires a reading of +10 for a buy; a downturn of the PROP 10 results in a sell signal; a reading of -10 gives a shortsell signal; and an upturn in PROP 10 closes the short position.
Here is today's PROP 10 report, sorted by PROP, low to high. In the LOW ZONE, from -25 to -7, we look for signals that confirm the position. For instance, we are short the two issues at the top of the report, both First Solar and US Steel. We went short last week.
There is only one new position today in the PROP 10 Report: LONG AVEO, Aveo Pharmaceuticals.
AVEO has tested very positively using PROP 10:
|Test Range: 5/27/10 to 8/28/15|
|Net P&L: 37.44|
|Percent Net P&L: 466.83%|
|Number of Trades: 14|
|Average P&L per Trade: 2.67|
|Percent Winning Trades: 100.00%|
|Total Days in Test: 1291|
|Percent Days in Market: 89.62%|
|Average P&L per Day: 0.03|
|Max Drawdown: 4.35|
|Reward/Risk Ratio: 8.607|
|Buy & Hold P&L: -6.60|
|vs. B&H P&L: 44.04|
|vs. B&H Percent P&L: 549.13%|
|vs. B&H Reward/Risk Ratio: 8.935|
|Current Position: Long|
|Open Trade P&L: 0.00|
|Traded Last Day: Enter Long|
Low-price stocks are usually relatively short-term trades using this trading system. AVEO looks good. We especially like the shape of T5 Simple, second pane down, with higher highs and higher lows.
Here's the report. Remember, when reading this report, it is not enough that an issue be in the BUY ZONE for the PROP 10 Trading System; it must hold the BUY ZONE and climb to +10 to generate a buy signal.
|CGTS PROP 10 SYSTEM|
|8/28/15||PROP 10||New position||New position|
|X||US Steel Corp||16.78||-25||Short|
|DWTI||* Crude Oil Bearish ETF 3x||123.32||-23||Flat|
|NUGT||* Gold Miners Stocks Bullish ETF 3x||3.42||-23||Flat|
|RUSS||* Russian Stocks Bearish ETF 3x||38.11||-23||Flat|
|^VIX||CRB Volatility Index Daily||26.15||-19||Flat|
|EWV||Short MSCI Japan ETF Daily||50.33||-19||Flat|
|EPV||Short MSCI Europe ETF||57.68||-13||Flat|
|^HUI||Gold Stock Index Daily||116.116||-11||Flat|
|CM||Canadian Imperial Bank of Commerce||72.93||-11||Flat||Exit Short|
|CURE||* Healthcare Stocks Bullish ETF 3x||34.15||-7||Flat|
|DRN||* Real Estate Stocks Bullish ETF 3x||62.8||-7||Flat|
|DUST||* Gold Miners Bearish ETF 3x||25||-7||Flat|
|GDXJ||Gold Junior Minors ETF Daily||20.48||-7||Flat||Exit Short|
|JDST||* Junior Gold Miners Bearish ETF 3x||9.321||-7||Flat|
|UMDD||* Midcap Stocks Bullish ETF 3x||53.07||-7||Flat|
|EOG||EOG Resources||77.31||-5||Flat||Exit Short|
|FAS||*Financial Stocks Bullish ETF 3x||28.37||-5||Flat|
|FAZ||*Financial Stocks Bearish ETF 3x||11.93||-3||Long|
|BRZU||* Brazil Stocks Bullish ETF 3x||24.94||-1||Flat|
|DZK||* Developing Markets Bullish ETF 3x||54.83||-1||Flat|
|EMES||Emerge Energy Services||16.48||-1||Flat|
|ERX||* Energy Stocks Bullish ETD 3x||31.83||-1||Flat|
|JPNL||* Japan Stocks Bullish ETF 3x||48.97||-1||Flat|
|MATL||* Basic Materials Stocks Bullish ETF 3x||42.29||-1||Flat|
|SOXL||* Semiconductor Stocks Bullish ETF 3x||22.29||-1||Flat|
|SPXL||* S&P 500 Bullish ETF 3 x||77.58||-1||Flat|
|TECL||* Technology Stock Buliish ETF 3 x||31.38||-1||Flat|
|TNA||Direxion Daily Small Cap Bull||70.33||-1||Flat|
|TQQQ||* Nasdaq (NASDAQ:QQQ) Bullish ETF 3x||98.57||-1||Flat|
|UDOW||* UP DOW ETF 3x||57.03||-1||Flat|
|UPRO||* S&P 500 Ultrapro ETF 3x||58.61||-1||Flat|
|URTY||* Russell 2000 Bullish ETF 3x||81.93||-1||Flat|
|AVEO||AVEO Pharmaceuticals||1.42||-1||Long||Enter Long|
|DRYS||Dry Ships Daily||0.44||1||Flat|
|GASL||* Natural Gas Stocks Bullish ETF 3x||6.52||1||Flat|
|JNUG||* Junior Gold Miners Bullish ETF 3x||8.99||1||Flat|
|UWTI||* Crude Oil Bullish ETF 3x||1.195||1||Flat|
|WLL||Whiting Petroleum||17.6||1||Flat||Exit Short|
|BHI||Baker Hughes Daily||54.72||3||Flat|
|BHP||BH Billiton LIMITED||36.69||3||Flat|
|MTL||Mechel Open Joint Stock Company||1.08||3||Flat|
|VNR||Vanguard Natural Resources||9.62||3||Flat|
|FCX||Freeport McMoran Mining||10.5||5||Flat||Exit Short|
|FINZ||* Finciancial Stocks Bearish ETF 3x||21.93||5||Flat|
|DGAZ||* Natural Gas Bearish ETF 3x||6.04||5||Long|
|RUSL||* Russia Stocks Bullish ETF 3x||16.48||21||Flat|
You may notice a couple of anomalies here: FAS, Financial Stocks Long, and FAZ, Financial Stocks Short, are both in the BUY ZONE. What's up with this?
First, let's look at FAS, the bull picture. Note the horrible shape of the T5 Simple, 2nd pane down. Lower lows and lower highs. This makes us highly suspicious of this reading -- we believe it will be short-lived. Look at how weekly the PROP reading pierced the BUY ZONE.
We are short the financial stocks. We bought call options on FAZ last week, expecting more selling of financial stocks.
FAZ gave a buy signal last week -- but these 3x ETF's are wildly volatile. The current picture suggests that FAZ will hold the BUY ZONE, and FAS will falter and fall back. Time will tell.
Let's look at oil. We sold our bearish oil position DWTI with a nice gain. Oil rallied hard. But is oil 'back'? Our thesis is that oil will decline as long as the US Dollar advances. A US Dollar Bull is an Oil Bear. What do the charts say, short-term?
Despite the big rally in oil, UWTI, Oil Bull ETF, is not giving a buy signal. In terms of the PROP 10 System, UWTI is still negative; and if we zone in to look at the T5 Simple trend, UWTI is still making lower lows and lower highs.
We do not believe that the oil rally is the real thing.