Almanac Trader: Middle Of August Good For Equities – Trade Alert

First few days of trading in August are usually bad for the US equities and this year was no exception. Our ‘Almanac Trader’ portfolio trade was quite successful. After that the scene improves briefly and generally the third week produces good returns for major US indices, consistent enough for us to develop a strategy to trade in the third week of August from the long side.

Since 2000, using 1X and 2X index ETFs, our strategy produced 48 trades and 75% of them were winners. The average gain is 2.0% for an average of six-day holding period giving an annualized return of 125.5%.

Seq. ETF # of Trades Win % Avg. Return Avg. Days Annualized
1 DIA/DDM 13 77% 1.8% 5 139%
2 SPY/SSO 11 82% 3.4% 7 176%
3 QQQ/QLD 13 69% 2.5% 7 128%
4 IWM/UWM 11 73% 3.5% 4 290%

The market action tells us that today we may initiate some of our trades.

  • Go long ProShares Ultra Dow 30 (DDM) if it closes below 114.85
  • Buy ProShares Ultra S&P 500 (SSO) if day’s close is below 111.78
  • Go long ProShares Ultra QQQ (QLD) if it close lower than 115.25
  • Buy ProShares Ultra Russell 2000 (UWM) if day’s close if below 77.75

We will issue trade alert for exit.

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