Alrighty, then, let’s get started. We don’t usually go week to week to week with nothing in between. But it has been that kind of time.
Portfolio update: We started January 1st, 2020 with $100,000. We now (after updating for the trade close out at the end of the week) is now: $142,917.10.
While this is a nice return, I want to remind you that market moves are explosive and unpredictable. We take everything our process kicks out. We do this otherwise we would no longer be objective, we would be inserting our decision making into the process – what could possibly go wrong?! We also do this because the big profitable move lurks somewhere in those trades we take. They are there. We wait for the them; for the market to come to us: we don’t force anything.
Translation: we could be sitting on the same amount at the end of 2020, or maybe a little less. So, be it. We stick to our process.
S&P 500: SSO = UP, SDS = DOWN
We had an open trade in the ETF SSO for some time. We were finally stopped out at the end of the week. Let’s look at the chart.
We entered this trade based on our rules at $70.28 with a trailing stop set just under support at $4.37 under the purchase price. As the price moved up, the stop moved with it. A high of $84.16 anchored the stop at $79.79, which is where we were stopped out.
$79.79 – $70.28 = $6.65 profit per share X 400 shares = $2,660.00
Nice work by us!
Gold: UGL = UP, GLL = DOWN
The markings on the chart are from the most recent trade. As you can see, the blue (21) and red (8) EMAs are above the green EMA (55), the price has fallen below the blue and the red. We need the price and or the red EMA to rise above the blue EMA to consider a trade.
We consider the trend to be UP using the definition of the blue being above the green. This means we will only take the long trade for this symbol. Once the price or the red has crossed (CLOSED) above the blue we would place a stop-buy just above that close. Next step is to look to the left for 60 days. Is there a higher price within that time window? If there is we would term it resistance and need a close above that level for our adjusted stop-buy.
Oil: UCO = UP, SCO = DOWN
It looked for awhile as if oil had finished consolidating and was ready for a run at the big time. But that is why we don’t act on “looks like”, only actually crosses and closes.
Even though the price for UCO closed above resistance, we never got a rise above that price to trigger our trade. The price has now fallen back to the extent, we need to take a look at the inverse, SCO.
Look at that! The price has risen above the blue. The blue is below the green indicating a downtrend which would usually mean no trade. The exception we allow is if the ROC in the upper pane is above the 0 line. It is, so we have a stop-buy in on this symbol that rises as the price of oil declines. That stop-buy is at $17.27. If triggered, our trailing stop would be at $14.25. If triggered, all details of the position would be detailed here.
20 year treasuries: UBT = UP, TBT = DOWN
As you look in wonder at the right hand side of the chart, you can see that our EMAs have all done their work. We are set for a trade. We look to the left and can see resistance at $16.27. We need a close above that level. We would then place a stop-buy just above the close.
In the meantime, we shall sit patiently for those events to unfold.
Dollar Index: UUP = UP, UDN = DOWN
UDN is currently our only open trade. We got in according to our process around position 1 at $20.67 with a trailing stop of .51 cents. The most recent high of $21.37 has anchored that stop at $20.86. The lowest point was $ 21.07 – 21 more cents to decline before we are stopped out. More importantly, this means that even if the prices collapses on us we are profitable: the trade is risk – free, it is a beautiful thing.
To get a better understanding of why buying above resistance is important, take a look at my book. Or not, you can just accept that is the way of it. Nothing wrong with that.
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Link to book and video package and FREE BOOKS: