Arbitrage

Arbitrage Trader Note: Buy SPX!

On February 25th, when the S&P500 index was trading at around 1,520′s, we wrote that the short-term market trend would turn to bearish and the setback would most likely test the 1,490 (maybe even further down to 1,450) level. Parallel to our expectations, following the elections in Italy, the market fell sharply on that day, closing at 1,487. Even though the Arbitrage Trader algorithm accurately predicted this mode in advance, the model did not forecast that the market would make up the decline in the following 2 trading sessions during which the market increased to where it stayed the week before. As our clients have noticed, the Arbitrage Trader model reversed its short-term forecast for the generic stock market to buy as of Friday morning:

- Statistical arbitrage model now recommends “buy”. Our Arbitrage Trader model algorithm is signaling a bullish trend in the indices for the coming 10-12 trading days. Even though we are moving only within the 2-3% distance from the all time high for the S&P500, the algorithm currently predicts further upside move. The bottom formation around 1,500 is also supporting further upside for the market.

- Technically, for the S&P500 index, 1,530 will be a key resistance level. Any daily close above this level with significant volume would confirm the bullish trend. For an aggressive trader, we would recommend 1,500 as a key support level or stop level.

In short, we now have a bullish view on the generic market for the coming 10-12 trading days and recommend our clients to buy into weakness in the market. However, we also strongly recommend frequent checks on our app as the overall volatility is now higher in the markets.

The short-term statistical arbitrage model that we use to generate these buy/sell market signals is the same model that we use to power Stock Arbitrage Trader for the iPhone & iPad to generate buy/sell signals for specific stocks. Click here to learn more or download now!

Arbitrage Trader Note: Sell Into Strength!

On January 15th, when the S&P500 index was trading at around 1,470, we wrote that the market trend was bullish and it would most likely test the 1,500 barrier. Parallel to our expectations, the market moved upwards at a somewhat slow but steady pace hitting 1,530s last week (5-yr highs). The Arbitrage Trader model now reverses its short-term forecast for the generic stock market to sell starting from today:

Statistical arbitrage model now recommends “sell”. Our Arbitrage Trader model algorithm is now signaling a small correction for the next 4-8 trading days. Currently, this mathematical signal is not extremely strong; therefore it may reverse again in the next couple of days. However, we strongly recommend our “long-only” clients to stay cautious for a possible setback. For aggressive traders who prefer to stay short against the market, we recommend using 1,530 as an interim stop level.

Technically, for the S&P500 index, we first expect to see a setback to 1,485-1,490 level which can be seen as an interim support for the market. However, a decline to 1,450s is also possible at which point we may see a reversing reaction. The first weekly decline last week (since December) also supports this prediction.

Most of the good news is already priced in. From the US earnings season to US budget talks, from the Japanese Central Bank’s easing to better Chinese economic numbers, most of the positive expectations related to markets are already priced in. While we continue see a positive outlook for the first quarter, lack of additional expectations will put pressure on the indices. This can also be observed by the strong negative reaction last week to the January Fed Minutes and recent volatility both in commodities and currencies.

In short, we now have a bearish view on the generic market for the coming 4-8 trading days and recommend our clients to sell into strength.

The short-term statistical arbitrage model that we use to generate these buy/sell market signals is the same model that we use to power Stock Arbitrage Trader for the iPhone & iPad to generate buy/sell signals for specific stocks. Click here to learn more or download now!

Arbitrage Trader Note: Reiterate Buy S&P500 08/01/2012

RIDE LIKE THE WIND: REITERATING BUY FOR S&P500

As our clients have followed, on July 22nd, we signaled “buy” for the generic market when S&P500 index was trading at 1,339s. On July 25th, we also wrote that the upward trend may continue until August 2nd for which date our market model algorithm had indicated a sell-off. Parallel to our expectations, the market moved to 1,380, briefly hitting the key resistance level at 1,390. Now, however, our arbitrage model signals a continued upward trend for at least the coming 2-week period:

  • Statistical arbitrage continues to recommend “buy”. Our market model algorithm continues to indicate upwards move in the market direction for the coming at least 10 trading days. According to our models, there is about 77% probability of further upside movement.
  • Technically, we now see a potential re-test of the 2012-high, which was 1,422 for S&P500. This time we may actually see the break of this key level. For aggressive traders, our stop-loss level continues to be at 1,330.
  • FED & ECB? While the markets do not expect much surprise from the FED today, we think that we may see developments that were not priced in yet. Furthermore, the ECB’s move (especially after Mario Draghi’s speech last week) tomorrow will also play critical role in the overall market direction.

In short, we reiterate our bullish view on the generic market for the coming 2-weeks.

For instant access to the Arbitrage Model Short-Term Forecast check the MarketPulse screen of our apps or download one of our popular iPad/iPhone apps directly from the iTunes AppStore: Stock Arbitrage Trader, Daily Stocks, and Stock Signals.

Arbitrage Trader Note 07/25/2012

IS IT TIME TO BUY SPX DESPITE THE BAD NEWS?
As our clients have followed, our arbitrage model forecast for the generic market has been all bullish between July 13th and July 22nd. On July 22nd, we signaled a “sell” as soon as numbers came from the Asian markets. However, the same day, our model started to signal “buy” at around 11:00am EST while S&P was trading lower at 1,339s. Now, our arbitrage model signals an upward trend for the coming 7 trading days (until August 2nd):

  • Statistical arbitrage now recommends “buy”. Our market model algorithm now indicates an upwards move in the market direction for at least the next 7 trading days. However, beyond that point, starting on August 2nd (remember last year?), we expect a fairly strong sell-off at this point in time. So, we recommend our clients to remain cautious.
  • Technically, we may still see some selling pressure in S&P500 down to 1,330 and even maybe further to 1,292. However, the last two sessions’ rallies towards the market closes support our current short-term bullish view. On the upside, we see 1,390 as a key resistance point. Another key level is of course 1,422, the highest level seen earlier this year, even though we do not expect to test that level soon.
  • Buy with these headlines? Yes, EU debt crisis is far from being resolved; Yes, Greece continues to be a problem; Yes, Spain’s bond yields cannot continue at these rates, and YES, EUR/USD, UST 10-Yrs, German Bunds all speak clearly about the seriousness of the problems. Additionally, US earnings are not surprisingly very much on the upside. However, as you all know, a good part of trading success comes from correct timing and patience. While we continue to see a negative macro picture, we also see some potential intervention by central banks and additional solutions on the table. As the markets hesitate to sell, it may be an early decision to sell into this hesitation.

In short, we reiterate our bullish view on the generic market for the coming 7 days.

You can have instant, and regular, access to our arbitrage model short-term forecast with any of the following apps: Stock Arbitrage Trader, Daily Stocks, Stock Signals, and Commodity Trader.

App Updated: Stock Arbitrage Trader 3.5!

Our popular iPad and iPhone application Stock Arbitrage Trader has a new update out and this already powerful app has a lot of new features. The most exciting feature are the new real-time charts, so along with your real-time signals you now get real-time charts, real-time prices, and real-time P/L information. If you want to confirm a signal by checking it’s chart you will no longer have to wait for the end of a trading day to see it’s relevant charting data, the charts auto-refresh and are available intra-day to 10 year. In addition to this the charts have over 40 new technical indicators that are extremely customizable, and by customizable we mean extremely customizable with indicators such as RSI 14 or 120. Whichever value interets you, is what is available within the app.

In addition to the customizable real-time charts the app is easier to navigate with highlights to recent signal changes, has an updated watchlist which will give you the signals for the stocks that you are interested in, making your analysis process as efficient as possible. The Market Pulse page has also received a facelift, in addition to an arbitrage directional forecast you get furtures and market momentum. We really think you’re going to enjoy the effort we’ve put into bringing you a better, easier to use, product. This is a product that is unmatched on the iPad or iPhone and is truly unique as it offers a level of analysis and research that has never been available before on a mobile device. You can upgrade or purchase Stock Arbitrage Trader from the iTunes AppStore and bring real-time charts to your iPhone or iPad now!

Photos of the iPad and iPhone versions of Stock Arbitrage Trader:

Reiterate Sell SPX 05-10-2012

REITERATING OUR SELL SIGNAL FOR 2 MORE WEEKS

Parallel to our May 3rd predictions, S&P500 index had a setback to 1,350 levels. Our statistical model forecasts more declines in the indexes. Even though, today, the market has started with a small rally, we think this reaction should be used to sell existing longs and even open some new short positions. In other words, the market upward move today should not fake our clients. Starting from Friday 11th, we expect a 10-day long bearish trend in the market:

  • Statistical arbitrage continues to signal sell for the coming 10 trading days. Today, we will likely see some short covering and even maybe a small rally. However, according to our statistical model, the next 10-trading days (through May 25th) we will see a bearish trend in the market.
  • Technically, we already hit our first target level of 1,350. However, we still believe that – given the uncertainty on the EU front and mixed economic data coming from all over the world – S&P500 might decline to 1,292 levels. For longer-term investors or long-only traders we do not recommend entering the market until May 28th, at which point the market might start to buy in some potentially good forthcoming news, including a potential QE3 from the Fed or a more settled atmosphere from the EU.

In summary, we reiterate our bearish view for next 2 weeks. We highly recommend you to remain cautious to early reactions in the market, as it may lead to fake rallies or breaks.

Get this market direction change instantly through your iPhone or iPad with Stock Arbitrage Trader. Learn more about Stock Arbitrage Trader.

Is it too late to buy into S&P500?

Since our last buy recommendation on the generic market on January 12th, 2012, the S&P500 index rallied about +2.5%, reaching 1,316.33 as of Friday 27th. As a lot of our clients are asking whether they have missed this upward trend, we would like to share our current view on the market:

  • Statistical arbitrage still recommends “buy” – Our market model algorithm still indicates upward moves in the market direction. While volatility may rise (as measured by VIX), the model predicts bullish trends to continue for the coming 1-2 weeks.
  • Technically speaking, we may easily see 1,347 in the S&P500 in the next 8-9 trading days - While temporary setbacks are possible, we believe that they should be used to enter the market on the long side. 1,292 can be seen as an interim support (or stop for aggressive traders).
  • Fundamental developments are positive, too - While some investors in the market were hoping for a quantitative easing #3 (QE3) from the FED last week, Bernanke’s extension of exceptionally low interest rates until Q4 2014 can easily be seen as a QE2.5, thus positive news for all risky assets.

So, our short answer is no, it is not too late to buy into S&P500 as we reiterate our bullish view on the generic trend.

Stock Arbitrage Trader will help you take advantage of the bullish trend.

Market Direction Change

As our Stock Arbitrage Trader customers may have already noticed that on November 30th, our Arbitrage model has changed its short-term market direction forecast to “buy” after almost 4 weeks of “sell” recommendation. This means that generic market movement will be upwards and overall risk apetite will increase in the coming 5-7 days.

Market Direction Change 3

For the S&P500, our arbitrage model is forecasting a retest of the October high of 1292 (about +4% gain) in the coming week. The positive drivers from the market will be expectations from the EU leader meetings that are going to be held on 8th and 9th of December as well as positive economic data. Investors/traders who use tight stop-losses might want to watch 1220 as an interim support level.

“If you don’t already own” Stock Arbitrage Trader take advantage of this positive movement by downloading the app for your iPhone or iPad here!

Stock Arbitrage Trader for iPhone is Here!

We recently updated our popular iPad app, Stock Arbitrage Trader and with this update we’ve released an iPhone version. It’s not always easy to port an iPad app to the iPhone but we could not be happier with the result. Over the next few days we’ll be going in-depth on how to maximize your return on this app. The main screen allows you to easily sort stocks alphabetically, by most recent signals, and by signal type. You can also easily see the last trading price. Within each stock you have access to charts, information, and news involving each stock.
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Screen shot of Stock Arbitrage Trader for iPhone showing Buy, Hold, and Sell Signals using an arbitrage trading model screenshot of stock arbitrage trader for iphone showing stock specific information and news


Within each stock you can also see its corresponding chart with a plethora of chart settings; Range (Daily to 5Y), Type (Line, Candle, Bar), Moving Average (10, 20, 50, 100, 150, 200), Overlays (Bolling Bands and Parabolic SAR) and a nice selection of Technical Indicators.
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A screen shot of an example stock chart in stock arbitrage trader for the iphone


Beyond the stocks and the signals themselves you get Market Pulse and access to your Watchlist. Market Pulse will give you an Arbitrage Model Short-Term Forecast, Futures, Market Summary, and some News from major sources. Our favorite feature is the the watchlist; it automatically syncs with your missingstep watchlist, giving you access to the stocks that you care about and most importantly it gives you quick access to which of your stocks have a corresponding signal. We’ve highlighted it in the blue box below, how cool is that?


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Stock Market News, Futures, Market Summary, and Arbitrage Forecast with Market Pulse within Stock Arbitrage Trader for iPhone Buy, Hold, and Sell Signals for the stocks you care about in your watchlist

If you’d like to learn more about arbitrage trading check out this article about Statistical Arbitrage. To stay updated about our upcoming projects, apps, and some great trading ideas be sure to follow us via RSS, on twitter, or on stocktwits.



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