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Friday, March 13, 2009

BARRY... BARRY



Here is an example of what has to be one of the darndest things I have ever seen in my 23 yr trading career, the Barack Short Sale Trade.



Here are the rules, wait for him to speak publicly on any topic during the morning hours of trading, and short the SP 500 immediately at the market. Use a 10 point stop, which has never been hit yet doing this, then trail down or stop to take profits. Posted here is todays trade, it is amazing to me how negative he is for the stock market. Regardless of your political leanings, this is a trade that just has to be done. Alternatively, you can look for short entries in other methods you use once he starts talking, but it is does not need to be that complicated.



For a trading system to be viable it has to be based on fundamentals, in other words, it has to make conceptual sense to expect a good repeating of the results out of sample. In this case, his policies are obviously negative for capitalism, and the market speaks loudly endorsing that. So you have a fundamental, that also winds up being supported by price action, which is what you need to have a technique like this work.



The only danger I see in this is that eventually everyone will figure this out and then it may stop working, but until then, it has never yet had a loss. I have tracked 12 of these so far, with 12 wins and no losses.

2 comments:

Anonymous said...

When everyone figures this out, it will work even better.

What's your current view on the market? How far will we rally?

Chris Johnston said...

I tend to disagree with that for one big reason, the PPT. At some point they will start buying futures when he speaks to offset this phenomenon. Just when John Q public figures it out it will stop working, that is what typically happens with trading patterns.

As far as price levels on the rally, I have never been great at projecting them. However, I think we are going to dip in the next couple of days to form a higher low than the lowest low. If this happens and we start moving up that should allow us to make some price projections or establish targets. It is more about the time of the move for me than the price. I will just read what the market is telling us once a brief pullback ends, if it pulls back at all. To be clear though, I do expect lower lows than what we have seen before years end.