Buy, Sell, or Hold? When, Why, and How? What to Expect From HT Trading Going Forward

Just want to post an update on what we plan on doing going forward. As we mentioned before, Bryan and I have specific experience in different areas of investing, trading, and money management. Recently, Bryan has been posting very thought-provoking analysis. We will be splitting the type of content that will be posted, focusing on our expertise during specific posts. We will both offer opinion and analysis on the other’s post if our added content adds value to the post. To give an example, Bryan might post regarding a specific industry and offer stocks that meet his criteria. I might then jump onto that post and continue, explaining what setup to look for and how to best execute the trade. Regarding futures trading, I will be focusing on “the market”, using the Dow E-mini (YM) as “the market”. To start, my first few posts will detail the following:

• Our trading process
• How we setup our charts (time-frames, indicators, etc)
• How we analyze price movements
• Our take on trading psychology and behavior of markets/investors

Following this, I will focus on:

• Specific setups / signals (I will teach you our “jargon” and what we look for)
• Entry, exit, and risk management

After all of the foundations are explained, it’s time to trade! At the moment, we have the idea of posting a weekly “outlook” on “the market” and then update during the week with signals that were triggered. We will include posts if a trade was filled, stopped, and/or met target. The idea is to have a trading plan for the coming week, monitor signals, post triggered trades, and show where stops and targets should be placed.

Aside from the above, I will throw in random posts related to trading the Dow E-mini Futures (YM). This could range from posting code for our signals to automated trading progress/results using our system.

Thanks and looking forward to the coming months!

A Lower Risk Way to Play Defense: Part II

We follow up on last week's post A Lower Risk Way to Play Defense. In that piece, we highlighted the fact that stocks with high long-term momentum that have recently had a period of consolidation or weakness tend to outperform stocks with poor long-term momentum that have recently had a period of strength. We demonstrated that this is especially true during bear markets. Obviously, we are not in a bear market, but if one is looking to start building a defensive portfolio, it would, nevertheless, make sense to implement the strategy. Normally we don't highlight the reasons "why" a strategy works, but instead let the market tell us "what" is working. We are interested in making money, not in becoming tenured professors. But... if one insists on finding a reason, one might realize that stocks that have performed well over the last year tend to be higher "quality" companies. Buying such companies after a period of weakness or consolidation becomes even more alluring when investors emphasize investment quality during a choppy or declining market environment.

The stocks listed as buys all rank in the top quintile based on this price momentum factor (12 month return minus 3 month return minus 3 times last month's return). The stocks listed as shorts are in the corresponding bottom quintile.

Short idea:

ASEI - A breakdown that is currently revisiting prior support at the '12 and '14 lows. Wait for the stock to reject those lows as new resistance, and short as it begins heading lower again.

Long ideas:

INUV - A new value zone has clearly been established and re-tested above the tops at $3. Therefore, the stock appears to have asymmetric risk to the upside:

VUZI - Ditto for this stock. The new value zone appears to offer at least $10.