Friday, December 31, 2010

The ADX Portfolio Strategy

For the new year, I have decided to record a mock technical trading strategy using the ADX. The ADX will be based on a 14d time period. The initial investment will be $10,000.

The criteria are below and the criteria are malleable if we don't stray to far from the core strategy, but rather tweak the strategy throughout the year in order to maximize the market opportunities The market changes, and sometimes the elements of the strategy would have to be evaluated.The ADX changes would be correlated to what the market is doing.  So, for instance, if you start seeing something emerge in the market that makes you cautious and you can identify and explain why you might want to be cautious, you can do a reciprocal strategy being short instead.  

Rules for the ADX Portfolio Strategy:

Only 4 positions or less at a time: this makes it very easy to get long, short, or neutral if the market changes.

  1. ADX is rising - between 20-27
  2. +DI is above 20
  3. -DI is below 20

  1. After the ADX closes with a 35, you sell the position on the 5th day it closes at 35 consecutively. (If it closes above for 3 days, then dips below for 2, and back up for 2 more up days, you now have to wait 3 more days for the signal to confirm)
  2. A 40% gain closes out the position.
  3. Stock losses 15% closes out position.
  4. DI - crosses above 20 you sell after 5th consecutive day close
  5. ADX indicator moves below 20 for a period of 5 days.

This is a simple premise but one thing to note:  instead of using closing prices, we trigger stocks on a intraday basis respective to its signal and rules.  It will be actively managed, not automated.

There is another note: transaction costs will be accounted for after the position closes.

Monday, December 13, 2010

Japanese Banks will run!!

MTU - Downtrendline Broken to Upside.  Looks to be a good 6 month trade.  Japan's banking system is awakening.

Sunday, December 12, 2010

Bronco Drilling - EMA Crossover - Bullish

The easiest trades are usually the ones with the easily identifiable bullish patterns, and nothing is more bullish than the EMA crossover.

Thursday, December 2, 2010

Is the Nasdaq headed for 3500?

Markets do things often not expected.  There are many reasons for the market to go down today, and very little reasons to argue for it to go up.  Although I believe the DJIA and SPX are probably near relative values over a 2-3yr period, I don't believe the Nasdaq can be stopped from now until then.

Based on the possible cup and handle formation in the Nasdaq, and its related calculations in its pattern, the Nasdaq may be heading to 3500 in the next 2 years. Yes, I said it, and Ill say it again - 3500 in the next 2 yrs.  I'm not going to get wordy, and self indulgent in all the reasons it can, and can't, but rather point to the technical formation and its possibilities.  If the handle breaks down, put a stop loss at 2200 and reevaluate your portfolio.

SOX - Cup and Handle? 

As a technical trader, I try not to listen to things that create to much murkiness to what the charts say.  And with that said, you can either drink from the cup, or pass!