Here are the instances in the past 2 years showing what happened when the 21MA of the CCI dipped from positive to negative. Before I begin, a little disclaimer: Occurrences are quite low @ 6 so take this with a grain of salt! I did go through data back to early 2008 (not shown here), and they are all similar to charts below.
Everytime, the market put in a short term bottom within 0-4 days and bounced significantly, including the instances not shown. TNA returned 10% to 28% from the bottom holding for 5 days. The exception was chart 2 below where it topped on day 4 and dropped hard day 5. XIV did ok, but if we get into backwardation like in Aug'11, it will under-perform. See pic 3. For this reason, my first few long purchases this week will be XIV, but will switch to TNA on Weds/Thurs if we keep dropping. Most of these bottoms occurred below the gray shaded bollinger band. I would like to see something similar this time before I get heavily long. I'm guessing our bottom could come around 1400 before the big bounce. I will get very aggressive down there. Otherwise, if we go up this week, like pic 2 below, I will unload my current 25% long position and begin building shorts this week.
This is my trading plan for the next 1.5 weeks and I will likely be disregarding my signals. We'll see how it goes, though. See you tomorrow.
thanks
ReplyDeleteJ, is this the bounce you expected? If so, what are your plans now?
ReplyDeleteThis is not exactly what I had in mind. However, JTS is giving a sell signal. CCI is already out, so I'll probably cash in on my XIV position today and go neutral/cash. If we finish hard to the upside today, we may even get a JTS short signal in which case I wouldn't mind taking on a small TZA position.
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