I want to start a new kind of content for the blog. Instead of addressing intraday trading, I will be focusing in mid-term to long-term swing trading opportunities in few instruments. We will have a look at the ‘state of the market’ and decide to enter long, exit a long position, or do nothing. The main instruments would be indexes and investment funds ETFs. Using these broad market instruments will serve us to grow our capital more as “active investors” than traders. Positions could be monitored once a week only and we shall be seeking to outperform an S&P500 buy and hold strategy for the year. It is a new challenge for me and I hope you enjoy it. Let’s see our main monitoring screen:
We have 6 screens, numbering them from top-left to bottom-right and from 1 to 6 we have:
- VTI: Vanguard ETF that tracks the whole market (3755 stocks).
- SPY: The SPDR S&P 500 Trust ETF that aims to track the Standard & Poor’s 500 Index.
- QQQ: The Invesco QQQ ETF that aims to track the Nasdaq 100 Index.
- $NYHGH: NYSE new highs 1 year is a Market Indicator which contains daily totals of NYSE traded stocks that have set a new 52-week high as of the specified date.
- VXX: The iPath Series B S&P 500 VIX Short-Term Futures ETN that aims to track the VIX.
- IWM: The Russell 2000 index, created in 1984 by the Frank Russell Company, is a stock market index comprised of 2,000 small-capitalization companies. It’s made up of the bottom two-thirds of the Russell 3000 index, a larger index of 3,000 publicly traded companies that represent nearly 98% of the investable U.S. stock market.
We will use the top 3 screens, the VTI, SPY and QQQ as our main investment instruments, by entering and exiting long positions as our signals tell us (more on this on a future post). The VXX can be as well an interesting investment mechanism that we can buy once a bar crosses above the XBP ALMA moving average (white line). We can take some profit from market bearish conditions but we shall be quick to close our position as soon as the bars close below the white line again.
The bottom 3 screens, the $NYHGH, VXX and IWM will act as part of our signals together with the XBP Efficiency Ratio oscillator from the top 3 screens. The main signals to watch are:
- $NYHGH: After a market retracement, with bars well below the XBP ALMA moving average, the first bar that crosses above the XBP ALMA moving average would be our entry long signal.
- VXX: Whenever the bar body is above the XBP ALMA moving average (white line) is an indication of increased volatility and most probably bearish conditions. We shall get out of our bullish positions in the rest of instruments.
- IWM: Kind of a leading indicator for the rest of the market. There are lots of traders that do not trade the Russell but keep an eye on it to “see the future” of the S&P500 and NASDAQ.
State of the Market 2021-04-20:
We could be at the doors of a bearish move of a significant impact. This hypothesis is based on the following observations:
- VTI, SPY and QQQ readings of the XBP Efficient Ratio are extremely overbought.
- &NYHGH bar’s full body below XBP ALMA moving average.
- VXX: Green bar above XBP ALMA moving average.
- IWM: Shows a bearish divergence pattern between the price action and the XBP Efficiency Ratio oscillator (new price highs were made while lower oscillator highs were read in the oscillator).
Call to Action:
- Exit any long positions in VTI, SPY and QQQ.
- Enter long position (short-term) in VXX and monitor daily.
We will come back analyze the market and our positions in our next post. Daily monitoring is highly recommended when we enter market trend changes like today.
Getting the XBP Indicators
If you are interested in using the XBP indicators, simply send me an email and we will complete the transaction using PayPal. The price of all indicators for a life-time license is of USD 100, just 2 E-mini points.
PayPal link: paypal.me/xbptrading
Why there is no a “Buy” button in the site? Well, because I’m not a company. I’m just a trader. My business is not to sell you an indicator. The $100 is just an appreciation token for all the time that I dedicated to craft the indicators and to write this blog 🙂