Gold looks like its ready for a decline here. There is a bearish divergence between gold stocks and the commodity , typically stocks lead the commodity. The gold stocks ala index HUI are giving us an early warning signal with a break in the uptrend line on April 11th and a series of lower highs and lower lows after the break of uptrend.
See picture below, you can see that in the past several months gold stocks gave an early warning signal by breaking prior uptrend lines before a decline in gold the commodity. The top pane is the HUI index which tracks gold stocks and the bottom pane is gold futures prices. If you don’t trade futures GLD is an ETF that tracks the commodity.
Another bearish influence to keep in mind is that seasonally gold declines from mid May to mid August. More specifically if you had shorted gold on the 96th trade day of year then covered in 60 trading you would have made money on 27 out of 36 years a 75% win rate. Today is the 80th trade day of year, the 96th trade day of year will be on May 19th. The smart money Commercial traders are bearish and sentiment is too bullish.
The performance report below is based on shorting 1 contract of gold on the 96th TDOY and covering in 60 trade days , since 1975.
I just wanted to thank you for my best trade in years I bought ZSL at the open on 4/25 and sold it at the close today for a $2k profit about 14% gain in a day.
I signed up for the 14 day trial and will definitely continue with the service. Please keep up the great work."
Thanks for this email, below is a list of the Ripe and Sharpe trades that hit in the last week. 10 wins out of 10 trades with an average trade of 5.4% , this is a 54% cumulative return!
Below you will find several back test results to compare the performance of $VIX, VX futures, VXX and VXZ.
The setups are all based on the $VIX after a stretch of x% above or below the 10 day moving average. For the exit I used a time based exit of 1 and 5 days. The tests were conducted from the beginning of VXX and VXZ trading history, March 2009 to present April 2011.
In this back test I show the performance results of buying the $VIX, VX futures, VXX, VXZ after the $VIX has closed 5%,10% and 15% BELOW its 10 day moving average. The exit was a 1 day and 5 day time based exit.
Performance results of Buying after a stretch of x% below the 10 day ma on $VIX then selling in 1 or 5 days
In this back test I show the performance results of shorting the VX futures, VXX, VXZ after the VIX has closed 5%,10% and 15% ABOVE its 10 day moving average. The exit was a 1 day and 5 day time based exit.
Performance results of shorting after a stretch of x% above the 10 day ma on $VIX then covering in 1 or 5 days
This table shows the performance results of ALL 1 day and 5 day periods a stretch above or below the 10 day moving average was NOT required.
The S&P has more than doubled during the March 2009 to April 2011 period of this test, so its not surprising that the Short positions made more money and average move of all periods was negative.
Based on the test results I think that the VXZ would make the best trading vehicle to capture up moves in the $VIX from the long side. And the VXX would make the best trading vehicle to capture down moves in the $VIX for short trades.
Below is a hypothetical equity curve of trading our VIX model using the VXZ for longs and VXX for shorts. This model would have turned $1,000 into $4,345 which is a 103% annualized return. All entry and exit signals were made public up until February 24th, you can see the list of trades here.
Sign up for a Free 14 day trial to our subscription service and get signals for the VIX model Click here
The New York Stock Exchange, NYSE, is open from Monday through Friday 9:30 a.m. to 4:00 p.m. ET. NYSE, NYSE Amex, NYSE Amex Options, NYSE Arca, NYSE Arca Options, NYSE Bonds and NYSE Liffe U.S. (NYSE Liffe U.S. 2011 Holiday Schedule - [PDF])
A valued subscriber asked us about the pattern of buying the SPY at the close after 4 consecutive lows in the SPY then exiting the trade on the 1st up close in the SPY. This pattern has occurred 125 times in the SPY history and the average trade is a very respectable .62% profit. See performance report below.
Historically when the SPY was bought after 5 consecutive lower closes, then sold on the 1st up close would have made you money on 42 out of 47 trades a 89% win rate and the average trade was .95% return.
See performance report below
This is what the pattern looks like on a chart . Today was a low risk entry point for the market especially coupled with the fact that the 3 day RSI on NDX closed below 15 See the details of the Ripe QQQ pattern here
Take a Free 14 day Trial of our subscription service , just click on the subscribe button and you wont be billed until after the 14th day. Subscription details here!
Just a heads up we made a few improvements to the subscription service.
1.Added a bond trading model with 9.8% annual returns and only 6.5% maximum drawdown.
2.Added a web link to an active spread spreadsheet that changes color when buys and shorts in the Ripe Trade setups and Sharpe Idea setups get triggered, Green for buys and Red for shorts! This makes it very easy to monitor these setups.
3.Lowered the entry threshold on Sharpe Idea shorts, this more than doubles the trading opportunities and the win rate is still 85% with an average trade size of 6.4% per trade. At 6.4% average return per trade , money will double every 12 trades!
4.Added a 14 day free trial.
Click the image below for a summary of the services
For further subscription details click the links below
To get the free trial click on the subscribe button at the top right hand corner of the page or at the bottom of the subscription detail pages. You wont get billed for 14 days, you can cancel if you dont like it!
Our money back guarantee: we proudly stand by our service. If you are unsatisfied with your subscription for any reason, simply let us know and we'll refund the prorated amount remaining on your subscription no questions asked.
Trade more successfully, trade more consistently, make more profits and have more confidence!
Our pledge is to establish lasting relationships with our customers by exceeding their expectations and gaining their trust through exceptional performance.We are committed to providing the best and latest product offerings for online purchase. If you have any questions about our new products please do not hesitate to contact us. RipeTrade@gmail.com
This is a strategy to trade bonds based on the principals discussed in our prior report on buying bonds when inflationary pressures are low and gold stocks are going down and selling bonds when inflation is a concern and gold stocks are going up.
Long entry Rules- Buy IEF when gold stocks are declining
Long Exit Rules- 1.4% stop loss, opposite signal or Average true range ratchet.
Signals are emailed out the night before and new trade entries are at the open.
Short entry Rule- Sell Short IEF when gold stocks are advancing.
Short Exit Rules- 1.4% stop loss, opposite signal or Average true range ratchet.
Signals are emailed out the night before and new trade entries are at the open.
If you aren’t familiar with the ATR ratchet it is a profit taking mechanism that progressively ratchets up an increment of average true range multiplied by the amount of time added to the lowest low in the trade, this brings the stop closer and closer to the current price as time goes by. Watch the video for an example.
This chart below shows the hypothetical growth of $100 invested in this trading strategy, the average annualized rate of return is 9.8% with a maximum peak to trough drawdown of 6.5%. This strategy doesn't have a down year, the worst performing year was 2007 with a +3% return, the best performing year was 2009 with a +19.75% return!
If you would like to receive signals to this bond trading strategy for the IEF, check out oursubscription options!
Below is the performance report of this Long and short trading strategy, based on trading the IEF which is an ETF that tracks the 10 year treasury bonds. Results are based on trading 100 shares per trade, since the IEF started trading in 2003 to present ( April 2011)
This is a performance report that shows how the LONG trades performed on the IEF! Click image to enlarge
This is a performance report that shows how the SHORT trades performed on the IEF! Click image to enlarge
If you would like to receive signals to this bond trading strategy for the IEF, check out oursubscription options!
This system is designed for timing both long and short trades in the S&P 500 futures, SPY, SDS,SOS, SPX options, or any other vehicle that tracks the S&P 500. This model gets long or short based on a proprietary quantitative algorithm. You will notice from the performance report that this system trades about 37 times a year and the average trade lasts 5.3 days. This system has only been invested 55% of all trading days since 1991 however the average annual return has been 20.4% with a largest peak to trough drawdown of -20%. The system hasn’t had a down year. The worst performing year is 2010 for a .5% return. The best performing year was 1999 for a +62% return. From 1990 to present (April 2011) This S&P system would have turned a 100,000 account into $4,634,565 without using any leverage. As a comparison buying $100,000 worth of the S&P in 1991 would now be worth $388,428 with a largest equity drawdown of 53% .
This system enters the S&P market on close and exits are based on an opposite signal, time based, 10% stop loss or a progressive profit taking mechanism. All signals for orders will be emailed out the night before and posted to the website.
Hypothetical growth of $100,000 from 1990 to present April 2011
To receive buy and sell signals for the intermediate term S&P model subscribe here!
Long and short trades- The performance report below is based on 1 contract trades since 1990!
( Click image to enlarge)
Equity curve ( Click image to enlarge)
Short trades only- The performance report below is based on 1 contract trades since 1990!
( Click image to enlarge)
Long trades only- The performance report below is based on 1 contract trades since 1990!
( Click image to enlarge)
To receive buy and sell signals for the intermediate term S&P model subscribe here!
Bond price movements are driven by investor opinions as to whether inflation is going to rise or fall.When inflationary fears are present bond prices fall and yields rise. If investors are not concerned with inflation bond prices rise and yields fall.
A great way to monitor inflationary perception is to watch the price of gold, which has historically been considered a hedge against inflation. Gold stocks actually lead the commodity and are an even better barometer for inflationary concern. For other intermarket relationships here is a google books link to John Murphys book on intermarket analysis.
Below are 2 charts and a video that show how the long treasury bond has performed after the gold miners index XAU has advanced and declined .The testing period was from 1984 to present and based on trading 1 contract of the long futures TQ. The exit was based on a 30day holding period. As a baseline for comparison the average trade size of all 30 day periods was $469.
This chart shows the average trade size when the XAU is down from -30% to 0, over a 30 day look back period. The exit was a 30 day exit. You can see that the larger the XAU decline ( low inflation concern) the higher the average trade size.
This chart shows the average trade size when the XAU is up from 0 to 30%, over a 30 day look back period. The exit was a 30 day exit. You can see that the larger the XAU advanced ( high inflationary concern) the lower the average trade size.
Tomorrow, I’m going to detail a trading strategy based on today’s principals of buying bonds when the XAU is down and selling bonds when XAU is advancing.
