|
Sample EbbChart Trading System Commentary |
Spinchart
(horizontal view)
|
Day:
|
C, S, I Ebbtracker |
Active ETF
System
Allocation |
Passive
TSP System Allocation* |
| Tuesday - |
 |
= 100% I-Fund x |
100% G Fund |
| Wednesday - |
 |
= 100% G-Fund |
100% G Fund |
| Thursday - |
 |
= 100% S-Fund |
50% S, 50% I Fund |
| Friday - |
|
= 100% S-Fund |
50% S, 50% I Fund |
x = x-check (see explanation below).
c = Contrarian signal
Bank of America's profits for the third quarter fell below analysts' expectations. The C-fund (-0.06%) has a stake in this company, so I was a bit surprised it didn't get hit harder yesterday. We gained a little from the S-fund (+0.05%), but the I-fund (+0.35%) took top honors for the best fund to be in. And that was mostly due to the dollar dropping half a percent. Today, we're hoping for Google to be the market's catalyst to move higher.
The ebbchart has been updated for next Tuesday. But for Monday, we have pattern 4 (C-green, S-red, I-green) on tap. Its accuracy rate (17/27 or 63%) in predicting up days for the I-fund is excellent. The I-fund (+7.33%) has the biggest gain for this stock pattern by far, so I wouldn't even think about using the C-fund (+1.65%) or the S-fund (+0.64%) with this. For what it's worth, it's been running 50/50 in its last ten outings. Check out the rest of the stats and description for each ebbchart pattern way down below.
Good luck all!
The system is currently in the S-fund today, but I'll be doing an IFT to the I-fund this Friday morning to be in the I-fund for Monday.
For the TSP: I'm in the
G-Fund Tuesday and Wednesday this week, and moving to S and I-fund (50/50)
for Thursday.
For stocks or ETFs: In the market Tuesday, back out for Wednesday.
How I play the SDS using the ebbchart:
-- If the ebbchart's system signal is I or S, then I 'sell short' the SDS ('buy to cover' to close the position).
-- If the ebbchart's system signal is G, then I buy the SDS (sell to close the position).
-- After a 'buy to cover' or 'sell' to close the SDS position, I immediately switch to a 'buy' or 'sell short' SDS before market close. That way I'd be in position for the next day. If one can't do it before market close, I suppose one can do it regularly after the market opens in the morning.
How to tell if playing SDS using the ebbchart is viable (not yet, but we'll see):
-- Since SDS is 2x inverse S&P 500, we only need to total all the gains and losses for the C-fund in the ebbtally 2008.
-- Patterns 01 (-12.05%)[+1.79%], 02 (-8.73%), 03 (+6.34%), 04 (+0.30%), 05 (+4.27%), 06 (-2.52%), 07 (-3.01%)[+0.76%], 08 (+5.75%).
-- Total C-fund (S&P 500) = -7.10%; SDS (2x S&P 500) = -14.20%; margin (2x leverage) = -28.40% (approximations).
View
the September
2007 EbbChart (prior charts are down below).
The System uses the ebbtracker's I-fund with simple cross-checking rules:
a) Two or more stop signs = safe haven (G or F-fund).
b) Two or more green signs = stocks (S
and/or I-fund).
Here is the updated tally for each pattern (1-8) on the ebbchart from January 16 through Oct.18, 2007. The tally for patterns 1, 2, 4 and 7 shows the number of up days and total gains when using the C, S or I-fund. The tally for patterns 3, 5, 6 and 8 shows the number of down days and total loss saved for the C, S or I-fund. The ebbchart has two sets of patterns: One set (1, 2, 4 and 7) goes to stocks (I-fund) and the other set (3, 5, 6 and 8) goes to safe haven (G/F).
Next Monday's pattern (two greens/stocks):
-- Pattern 4: Up days (17/27 or 63%); total gain (+7.33%).
-- One of the best patterns to follow into stocks. Running 50/50 in its
last ten outings.
Today's pattern (three greens/stocks):
-- Pattern 1: Up days (25/40 or 63%); total gain (+10.92%). Using the
S-fund.
-- Back-to-back appearance. Successful in eight of its last nine outings!
Yesterday's pattern (three greens/stocks):
-- Pattern 1: I-fund up (+0.35%); S-fund up (+0.05%); C-fund down (-.06%)
for the day.
-- Up days (25/40 to 26/41); total gain (+10.92% to +10.97%). A gain is a
gain is a gain.
Patterns going to stocks (two or more greens):
-- Pattern 1: Up days (26/41 or 63%); total gain (+10.97%). Using the
S-fund.
-- Pattern 2: Up days (17/24 or 71%); total gain (+6.61%).
-- Pattern 4: Up days (17/27 or 63%); total gain (+7.33%).
Patterns going to safe haven (two or more
reds):
-- Pattern 3: Down days (12/26 or 46%); total loss saved (-9.48%).
-- Pattern 6: Down days (13/22 or 59%); total loss saved (-3.97%).
Patterns that are weak (not working):
-- Patterns 5, 7 and 8 continue to leave gains on the table or fail to save
us from losses.
-- If these patterns remain weak, contrarian plays* in the future might be
worth a try.
Contrarian plays* (started on July 30):
-- Patterns 5 & 8 - weakest of the safe haven patterns; pattern 7 - weakest
of the stock patterns.
-- Pattern 5: Up days (5/7); total gain (+0.49%). Safe haven pattern
played as a stock pattern.
-- Pattern 8: Up days (3/4); total gain (+4.54%). Safe haven pattern
played as a stock pattern.
-- Tot. 5 & 8: Up days (8/11); total gain (+5.05%). Being nimble and
taking what the system presents.
-- Pattern 7: Down days (0/2); total gain missed (+2.74%). Stock pattern
--> safe haven pattern.
More stats to ponder (contrarian plays are not
included in these stats):
-- I-fund total from Jan.16 thru Oct. 18: Up days (114/192 or 59%); down
days (76/192 or 40%).
-- On days with patterns 1, 2, 4 or 7: Up days (70/108 or 65%); total gain
(+24.63%).
-- On days with patterns 3, 5, 6 or 8: Down days (39/84 or 46%); total loss
saved (-7.29%).
-- The ebbchart increased our probability of catching up days (+.06%) and
down days (+.06%).
-- Our exposure to stocks was also low at only 56% (108/192 in stocks and
84/192 in safe haven).
-- On top of the total gain (+24.63%), we also get to pick up some G-penny
along the way.
Great to know the ebbtracker's generated patterns for
the ebbchart are in tune with the market. If both sets of patterns (safe
haven/stock) produced good gains or the results were reversed, then it's
time to go back to the drawing board.
Note: A day with no gain or loss for a fund won't be
counted on the pattern tally.
--------------------------------------------------------------------------------------------
All the patterns for the ebbchart established
as of 9/07/07:
Only patterns 1 and 5 use the S-fund. The rest of the patterns use the
I-fund.
For stock patterns we have:
-- Pattern 1: Up days (26/41 or 63%); total gain (+10.97%); (green, green,
green).
-- Pattern 2: Up days (17/24 or 71%); total gain (+6.61%); (green, green,
red).
-- Pattern 4: Up days (17/27 or 63%); total gain (+7.75%); (green, red,
green).
-- Pattern 5: Up days (13/17 or 76%); total gain (+3.73%); (red, red,
red). Contrarian pattern.
-- Pattern 8: Up days (11/17 or 65%); total gain (+5.72%); (red, green,
red). Contrarian pattern.
-- Total avg: Up days (84/126 or 67%); total gain (+34.36%).
For safe haven patterns we have:
-- Pattern 3: Down days (12/26 or 46%); total loss saved (-9.84%); (green,
red, red).
-- Pattern 6: Down days (13/22 or 59%); total loss saved (-3.97%); (red,
red, green).
-- Pattern 7: Down days (07/15 or 47%); total loss saved (-0.56%); (red,
green, green). Contrarian pattern.
-- Total avg: Down days (32/63 or 51%); total loss saved (-14.01%).
Since January 16, up days turned up 59% of the time and down days only 40%.
The ebbchart lets us improve our chances of catching up days by 8% and down
days by an astonishing 11%. Imagine having casino-like house advantage
working for us everyday. Remember, even professional gamblers have trouble
sustaining a 7% to 8% winning edge over time. At any rate, it took the
contrarian patterns more than half a year to reveal its true colors, but I
think it was worth the wait. Having five patterns for stocks (5/8 or 62.5%)
and three patterns for safe haven (3/8 or 37.5%) will undoubtedly give us
the proper balance for optimal success.
- ebb
More on the ebbchart and x-checking:
|
