As a thank you to all of our loyal customer’s we would like to offer a $10 off exclusive discount on the following apps: Daily Stocks (iPad), Stock Arbitrage Trader (iPad & iPhone), Stock Signals (iPad & iPhone), Stock Trading Ideas (iPad & iPhone), Forex Signals (iPad), and Market Scan (iPad).
On March 1st, when the S&P500 index was trading at around 1,520s, we wrote that the short-term market trend would turn to bullish even though the S&P500 index is within the 2-3% distance from its all time high. Parallel to our expectations, the market has tested its all time highs despite the deteriorating sentiment related to the developments in Cyprus and Italy. While the S&P500 is floating at 1,560s nowadays, our arbitrage model now signals bearish trend for the coming week:
• Our statistical arbitrage model now recommends “sell”. Our Arbitrage Trader model algorithm is now signaling a bearish trend in the indices for the coming 7-8 trading days. The equity markets even in Germany, France, and the UK took major hits in the recent week and the latest macro-economic data from the US stayed below expectations. As a result of Cyprus and Italy, EUR/USD broke down its 200-day moving average and it’s trading around 1.2800. As a consequence, we believe that the S&P500 index will find it difficult to move another upward leg before it faces a small correction.
• Technically, for the S&P500 index, 1,530 will be an interim resistance. However, we believe that we may see another testing of the 1,500 level in the market. For aggressive short positions 1,578 may be used as a stop-loss level. Even though markets do not expect the selling pressure arriving before April or the quarter end, we think that starting from today (March 28th) we may see a correction in the market.
In short, we now have a bearish view on the generic market for the coming week 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!
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!
I use a variety of software to manage a $37 million portfolio of client assets at CB3. While the missingSTEP software apps are not my only decision-making tools, they are key. Recently, the Arbitrage Model Short-Term Forecast was dead on within a few hours of picking the top in the market: it flipped to a SELL after being on a BUY for an unusually long period of time of two months. This single indicator is roughly 25-30% of my decision-making process for my overall bias of market direction. Even with the Bloomberg Terminal and Reuters data that we use, I find that the missingSTEP Arbitrage Model Short-Term Forecast is correct more than 70% of the time when it flips. I would encourage both novices and pros to consider one or more of the missingSTEP apps, all of which offer this Arbitrage Model Short-Term Forecast.
— A Note on the Arbitrage Model Short-Term Forecast from Charles Brown of CB3
The stop-loss concept is one of the most necessary, but unfortunately, also one of the most overstated terms in the investment world. These conflicting drivers make stop-loss a vital yet also tricky checklist item in trading.
Determining a stop-loss level that is too large is dangerous and potentially makes the trader lose a lot on a bad call. However, even worse happens when the trader accurately positions his/her trade in the right direction with a very tight stop-loss and gets stopped before the instrument makes the expected move to the right direction. Especially in instruments that demonstrate high volatility by their nature (e.g., high beta stocks, commodities, and f/x instruments) placing a small stop would almost certainly end-up in a loss. The market is full of fake rallies, false breaks, and timeless surprises that can confuse a disciplined stop-loss approach easily.
Investors and traders use different stop-loss methodologies when entering trades and managing their portfolios. These include technical levels (e.g., major support levels, double-bottoms etc.), % or absolute loss levels, and others. Unless you are a professional trader with substantial trading experience, we would not recommend very tight stop-losses that in series can significantly harm your portfolio balances. This is especially important when the markets start trading sideways. In those cases doing nothing and waiting for confirmations in the market become the wisest move.
Our Stock Arbitrage Trader app uses an unconventional stop-loss algorithm that is based on a trailing statistical analysis. Based on this complicated mathematical analysis, the app uses a stop-loss determined and dynamically changed (trailing) for every stock’s standard deviation and variance characteristics. If the price reaches that particular stop level, the signal changes to hold or reverses from buy to sell (or vice versa). However, in our app – as can be seen from P/L levels – these stop-loss levels are not extremely small. Our clients should also note that in very volatile tickers (e.g., FSLR) the actual signal reversal mostly occurs before a stop-loss is reached. In other words, our clients will be seeing stop-losses very rarely in our app. On the other hand, the model would be accurately reversing trades before these sharp moves take place in the price.
How do you manage your stop-loss level? Let us know in the comments section below.
You can download Stock Arbitrage Trader for your iPhone and iPad via the iTunes App Store.
If you liked this post you might also be interested in the following posts:
8 Principles to Follow for Successful Trading
Psychological Factors Affecting Short Term Stock Trading Part 1 and Part 2
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:
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.
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):
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.
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:
Not quite sure about Stock Arbitrage Trader or Commodity Trader? Own them and want to get insight on how a professional trader uses these powerful tools? Charles Brown from CB3 FInancial Group explains how he uses these apps in his daily flow. How do you use these apps?
Download Stock Arbitrage Trader for the iPhone and iPad and Commodity Trader for the iPad directly from the iTunes AppStore.
We appreciate Charles Brown as a customer and the wonderful insight he provides, please visit cb3.com to learn more about him and the services he offers.
Charles Brown from CB3 Financial Group with another Charlie’s Market Minute Segment. In this segment he shows how he uses Stock Arbitrage Trader and Daily Stocks as tools to get an idea for market sentiment.
You can find the original video and more at cb3.com.
