Monday, November 25, 2013

S&P Market Timing

Basically, I have now a new found vigour.

I'm going to try a tiny small amount into a S&P market timing strategy. I will be leveraging and timing the market with the iMarketsignals iM-Best(SPY-SH) model, as well as also combining cues from @CiovaccoCapital.

iMarketsignals model combines the VIX, risk premium, current EPS estimate and the price. I think that the parameters that they are using quite accurately reflect a very clean and simple take on the market, and they have clear buy and sell signals. Buy and sell signals are given and affirmed on a weekly basis, giving their model a much longer term outlook, which means less frequent trading and less chances of false positives since it is smoothed. Their model is pretty lovely and I personally like it, as well as the other models and indicators that they have.

Ciovacco Capital is something that I stumbled upon today. They have a fantastic weekly video as well as sporadic updates on their blog, which goes through charts in a very unbiased and open minded fashion, while closely looking at indicators and reminding us not to hold onto biased views. Their models and calls seem pretty accurate, but they seem to be more actively and not as long-term in the market.

I feel that iMarketsignals only has a very decisive long / short calls, which doesn't really provide too much background information about the calls and the conditions of the market from what their indicators show and how they got the call. Still, it seems pretty good, and it is a open and investible model. Ciovacco Capital will run me down the latest updates of the week and this allows them to issue forewarnings before pointing out decisive bearish indicators. I like this, as it gives me more of a personal insight and opinion, so that when an iMarketsignal is given, I can be more confident following it.

So, I'll probably be using Ciovacco Capital as a leading indicator, with iMarketsignal as the final boss call, especially for bearish calls.

Both of these are updated on a weekly basis, and they both hold a more longer term view, which I like. Now that I've got the input information settled, how I am going to use this information?

Well, I think that I will start with a deposit of $500 into my CFD account. I'm going to keep this $500, with it's realized profits, separate from the current (losing) money that I have in my CFD account playing around with currencies and making intra-week bets. If I go bust with my speculative money, I think I will take a break from speculating and focus more on this S&P model. Perhaps even go back to a dummy account.

With this $500, I'm hoping to actually add in $100 a week for a while, just to see how this investment goes. Of course, if there's a market crash, maybe I'll even add in more. However, I have capped my leveraged to only X2, so that my drawdown won't exceed 50%, and I will always place a trailing SL of 15% (which comes to 30% since it's levered X2). Even though the CFD only offers X5 leverage, I've already done the math so that I'll only be using X2 leverage. The spare cash makes up the buffer. There is a 5% buffer on the drawdown amount, as well as a 10% buffer in cash before reaching the 20% account close-off value. Basically, plenty of buffer to make sure I don't close because of volatility.

I will be monitoring all my inputs to make sure that my speculative value isn't crossing over and eating away at my buffer zones.

I am actually honestly quite excited and thrilled by the prospects of this!

2 comments:

  1. How is this working out for you? Still recommend it?

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    Replies
    1. Hi John.

      Actually, I've abandoned this model and I've shifted away quite markedly from day trading. With the massive amounts of intervention, I find it hard to call it a "market" anymore since price discovery is bollocks. I'm sure in probably most other times in history other than the dot-com bubble and now, this might work quite well, but things now just isn't normal. I am investing more cautiously into a diversified group of hard assets, just waiting for a time to pull this back out and use it.

      Good luck in this casino man.

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