Bull & Bear Tracker subscriber,
On Friday November 2, the Bull & Bear Tracker issued a GREEN signal to buy the SPXL before the market closed. Based on yesterday’s closing price the SPXL had increased by 10%. Even though the signal remains GREEN you should consider to take a defensive posture to protect your profit for the two reasons that I have stated below.
- The S&P 500 has retraced approximately 50% of its downward October spike. Read my November 4, 2018, article entitled “Bull & Bear Tracker Now GREEN; Coast is Clear for foreseeable Future”.
- The 10% gain for the SPXL in three days is an anomaly. Based on the published signals and the back tested signals for the December 29, 2017 through April 9, 2018 period, the highest prior period return for either the GREEN (SPXL) or RED (SPXS) was a January 2018 RED signal. The RED produced a back tested gain of 6.6% over a 13 day period.
To protect your profit enter stop loss orders at price points which are 3% below the market. Should the price of the SPXL continue to move up you can continue to move up your stop loss. The reason for the 3% threshold is because it would be equivalent to a 1% sell-off for the S&P 500 which would indicate a significant increase in market volatility. Should you get sold out or take a profit and should the signal remain GREEN and the market sell off substantially you would be in the position to re-establish your position.
Based on ongoing research being conducted on the October 2018 crash the parameters for the algorithm which powers the Bull & Bear Tracker have been tweaked. Had the new parameters been in place from October 4 through November 2nd the return was over 30% based on the back tested results versus the actual 8.9% return for October’s signals. See performance table in November 4, 2018 article.
Finally, if you have not already done so, I highly recommend that you register to receive BullsNBears.com’s email alerts. My articles will enable you to become more insightful about the market and to leverage my 40 plus years of experience.
Michael Markowski, algorithm developer