Almanac Trader Alert – June Expiration Week Trade Continues

Markets continue to go higher and we got entry signals for four more ETFs in our Almanac Trader portfolio. One can argue that in this upward moving markets trading on the sort side is not a good idea. However, trading is all about probabilities. If for any setup or strategy the probabilities to make profit is good then we take those trades. It does not mean that the trade will always be profitable but that if we trade those setups and strategies enough number of times than we will be profitable. Some trades will generate loss and some profit but the sum of them is going to be positive.

We can not know the future so we can’t guarantee that the week after June expiration week will be a down week making our trade profitable. But based upon the past analysis, there is a good probability that it will be. Our entry strategy uses oscillators, which means that we try enter a short trade when the indicators are in overbought territory, which by definition means that we will be taking contrarian entry.

Friday June 20th, close generated entry signals for SMN, SIJ, SKF and DXD.

  • Go long SMN, ProShares Untra-Short Basic Materials, at or near 28.29
  • Buy SIJ, ProShares Ultra-Short Industrials, at or near 46.79
  • Go Long SKF, ProShares Ultra-Short Financials, at or near 15.42
  • Buy DXD, ProShares Ultra-Short Dow 30, at or near 25.19

Not all of these are very liquid. If you are concerned with liquidity then you may try substitutes or short the underlying long ETF.

Not all of the these ETFs have generated a trade every year since 2000.

  • XLB/SMN ETFs produced 7 winning trades with no losses for 3.7% average return in 7 days
  • XLI/.SIJ ETFs also produced 7 wins and no loss for an average return of 3.4% in 7 days
  • XLF/SKF ETF has 3 wins and one loss since 2000. The average gain was 2.3% and the average holding period was 8
  • DIA/DXD combination was 80% successful in five years. The average gain is 2.2% with 7-day holding period

Comparatively, these ETFs are not outperforming SPY.



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