TradingMarkets members and regular readers know that our
philosophy is to look for short-term oversold conditions within the context of a
longer-term up trend. In other words, we like to buy short-term market weakness.
This philosophy comes from our quantitative research into how markets really
work.
In January, we launched the TradingMarkets S&P Market Timing course, which we
also trade in a real-money account. Since inception, the account is up 16%,
hitting new equity highs on Wednesday. While past performance is no guarantee of
future performance, we feel this course provides traders with a quantified edge
they can count on.
The course teaches 32 market timing signals, including VIX strategies, TRINstrategies, RSI strategies, End of the Month Strategies, closing price
strategies, Bollinger strategies, DMI strategies, and short strategies.
We published some of our TRIN research in January, and Larry Connors
presented even more in-depth research at a live webinar for the CME. Here’s a
quick recap of how the TRIN can provide you with an edge.
A Quantified Way of Using the TRIN
There are numerous ways to use the TRIN to help time your trades for the
SPY's, E-mini's, options, etc. Here's one simple strategy which you can apply to
your trading immediately. There are four simple steps:
- The SPY's (SPY) are above the 200-day SMA.
- The TRIN closes above 1.0 for three consecutive days.
- On the day this happens, buy the market on the close.
- Exit when the SPY's close above their 5-day SMA.
Since the launch of the E-minis in September 1997, this has happened 74
times. 72% of the time, the market closed higher using the above rules. To put
this in perspective, the market has closed higher five days later (from every
trading day) 57% of the time when it's been above the 200-day MA. By waiting for
the TRIN to close three days in a row above 1.0, your edge jumps to 72%, a large
improvement. The average hold for these signals has been less than five days.
The drawback to the above is that it has only signaled 74 times and held a
position in
the market for about 300 total days. But, if you take this one method and
combine it with others, you start seeing the makings of a
market timing methodology that can guide you on a day-to-day basis.
If you are interested in learning about more research like this, and trading
strategies designed to capitalize on this type of market behavior,
click here to learn more about the TradingMarkets S&P Market Timing Course.
The course is taught by Paul Sabo, a professional trader for more than 18 years,
and Larry Connors, TradingMarkets Founder and CEO.
Listen to a free Market Timing presentation by Paul Sabo and Larry Connors.
Click here to
start the presentation.
If you have any questions or comments, please call us at (888) 484-8220 ext.
1 or (213) 955-5858 ext. 1, or leave
feedback here.
Ashton Dorkins is Editor-in-Chief of TradingMarkets.
