Great Trades

Great stock trades based on fundamentals and technical analysis.

Sunday, March 01, 2009


Year-to-date Performance through February 09

It was a horrible week for the stock market, as the Dow and S&P 500 both broke their November lows, but it was a great week for trading. Our trading model not only got long for the big one-day bounce-back rally, but also got heavily short for the ensuing selloff when S&P 500 780 resistance held. Also, it got long for the very nice rally in oil and got short/hedged gold at the peak in gold.

Not including the February 3 intraday long for 200+ Dow points, and not including the short gold hedge from the exact peak day so far, below is our trading model's performance based on a hypothetical $10,000 account and our blog posts, with growth to $11,458, or 14.6%, vs. the S&P 500's -18.6% return on the year so far:

Speculative traders, using a separate hypothetical $10,000 account for calculation, were able to make an additional 16.4%:

Commissions are not included in the above calculations, nor is interest credited for cash or interest charged on any margin. Closing prices were used for most trades, and approximate intraday prices for intraday posts. When our trading model stopped out and re-entered very close by, we counted it as just holding the position rather than increasing our calculated returns from those very fast actions.

At this point, the market is very oversold, but our trading model indicators are not hitting the bounceback levels they were hitting before last Tuesday's bounceback rally. That rally reset our indicators, allowing the market to continue lower. In a normal market, the bounceback rally would have started earlier and lasted longer, so this market action has been particularly weak.

Given the current market conditions, the best position for our trading model at this time is to remain heavily short with a relatively tight stop until our indicators hit bounceback levels. With the primary trend bearish, we need to remain cautious when taking on long positions until the market puts in a clear reversal.

Open Positions: 70% short S&P 500, 25% short financials, speculative traders short another 30% financials and 20% S&P 500, short gold to hedge.

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Disclaimer: Great Trades may have a position in all or some of the stocks discussed in this blog, but is not paid by any company to promote their stock. Great Trades contains opinions, none of which constitute a recommendation that any particular security, transaction, or investment strategy is suitable for any specific person. Great Trades does not provide personalized investment advice.

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