This is Friday, October 30, 2015, the last trading day of the month and selling on the close the first day of the new month. As the last day in October, this is the day you need to go short the Russian Stock Market by buying the triple leveraged Russian Stock Market Bearish ETF (NYSEARCA:RUSS). To see how this trade has worked out recently, just take a look at the following chart:
This is the daily chart of RUSS, the triple leveraged inverse Russian stock market. When the Russian stock market sells off, you make money in RUSS. In researching this chart, I noticed a pattern that I believe can be exploited. The pattern involves buying RUSS on the last trading day of the month. Since today is October 30th, and the last trading day in the month, I plan to buy RUSS just before the close of trading today.
Why? Just look at recent results.
|Sept 30 40.77||Oct 1 42.85||2.08 Gain|
|Aug 31 35.96||Sept 1 43.40||7.44 Gain|
|July 31 38.37||Aug 3 42.52||4.15 Gain|
|June 30 32.62||July 1 34.98||2.36 Gain|
|May 29 31.41||Jun 1 34.18||2.77 Gain|
|Apr 30 28.60||May 1 27.92||0.68 Loss|
|Mar 31 48.44||Apr 1 42.80||5.64 Loss|
|Feb 27 46.88||Mar 2 50.16||3.28 Gain|
Starting with September and going backwards, buying on the last trading day of the month, paid off handsomely for the last 5 months. Buying April 30th, a wash trade. Only in March did we break support and get killed and continue falling hard. In March RUSS was in a down trend and quite vulnerable. Looking at RUSS today, you are buying near major support at very low prices, as the Russian stock market is trading near recent highs. Buying RUSS near the bottom greatly reduces risk. RUSS appears to be starting the last few days in an upward channel which should cause a continuation and spike high next Monday.
I marked the end of month dates with arrows and put a "star" if the trade worked out. Looking at the chart, you will see that instead of taking profits after one day, you can sometimes make additional money holding in the position for an extra day or two. It is also amazing that these kind of net gains can be realized so consistently in a trade that you are only in for one day (not counting the weekend when the market is closed).
The thoughts and opinions in this article, along with all STOCKTALK posts made by Robert Edwards, are my own. I am merely giving my interpretation of market moves as I see them. I am sharing what I am doing in my own trading. Sometimes I am correct, while other times I am wrong. They are not trading recommendations, but just another opinion that one may consider as one does their own due diligence.
Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in RUSS over the next 72 hours.