We were not able to 100% quantify a head and shoulders trading strategy. The formation is too difficult to put down into specific backtest rules. However, we were able to find some statistics done many years ago by Thomas Bulkowski and this serves as a proxy for our backtesting. Some investors and analysts turn to…
There are many tools investors use to measure investors’ sentiment in the stock market, but the advance/decline indicator is one of the simplest ones. But what does the advance-decline indicator mean? Often referred to as the advance/decline index or advance/decline (AD) line, the advance-decline indicator is a market breadth indicator that plots the cumulative difference…
A Pair Trade in SPY And TLT (Pairs Trading Strategies). A few days ago, we witnessed major moves in both long-term Treasuries (TLT) and the S&P 500 (SPY). That is not abnormal: when the going gets tough in stocks, many investors rotate into “safe” Treasuries. We write “safe” because over the long-term, especially now, you…
The Holiday effect system in the stock market is a well-known anomaly and seasonality. Is there a way to profit from the holiday effect seasonality? Are there any holiday effects in the stock markets? If so, which holiday is the best? The holiday effect strategy seems to be significant for Independence Day, Thanksgiving, and Christmas….
Breakout trading strategies involve identifying points where the price of a stock or asset breaks through a significant level of support or resistance. Imagine a race where a runner suddenly bursts through the front of the pack – that’s like a breakout in trading. When a stock breaks past a key price level, it often…
In a previous article, we presented an S&P 500 and gold rotation strategy. Today we test a sector rotation strategy between S&P 500 and gold miners. Let’s call the strategy an S&P 500 and gold miners rotation strategy. The logic behind the strategy is based on this: The stock market has a strong seasonality from…
Many traders look at the gold and S&P 500 ratio. The ratio can be used to create sector rotation strategies are popular. One of the reasons is the anticipation of better and more efficient capital allocation, and perhaps a second aim is to reduce the drawdown. Today we backtest a strategy that rotates between the…
This article presents some trend following strategies on Bitcoin. Cryptocurrency markets have many of the characteristics of the commodities markets: Wild swings and gyrations, both up and down, exactly what is needed for trend following and momentum strategies. Does this mean that trend following works in bitcoin? By using simple moving averages, you manage to…
Bond trading strategies are difficult to find. Bonds are susceptible to erratic macro numbers and we believe bonds are harder to trade than stocks. Can the Japanese stock market predict the trend in US Treasury bonds? In this article, we look at how the Japanese stock market has predicted the trend in US Treasury bonds…
Keltner Bands Trading Strategy (Keltner Channels) is a lesser-known sibling of the Bollinger Bands which are widely used and pretty famous. Despite being rather unknown, Keltner Bands are still included in most software packages. In this article, we take a look at Keltner Bands to see what it is, how they are calculated, how they…
