A Tradable Edge

By Chart School

April 9, 2010

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293

A tradable edge

Courtesy of Allan

On April 1, the GLD Daily Trend Model flipped long, with GLD closing on that day at 110.26.

GLD Daily Trend Model

One week later, GLD is above 113, for about a 3% gain. This gain may not look like much on the above chart, but the near-term at-the-money calls are up well over 100%. The Buy signal didn’t come in at the very bottom, but it did come in early enough in the GLD rally to generate some nice gains. The same can be said for the three other signals shown on the Daily chart above. I like the way these signals perform, not perfect, but a tradable edge.

What now? Hold your gold. It’s in an up trend. Same thing for financials.

Financials and the market

FAS is a triple leveraged ETF for financial services stocks. Its hard to imagine the market suffering any kind of sustainable decline with this kind of strength:

FAS Daily Model

GS Daily Model

The Sell signal in GS at the end of March was not confirmed in FAS. Wish I had noticed this earlier, but don’t know if it would have been enough for me to pass on the GS Sell. In any case, they are both pointing up, for now.

Allan’s recently launched newsletter, “Trend Following Trading Model,” goes with the trading system he’s been working on for years. His trend-following method is chart-based and objective. Most trades last for weeks to months. Allan’s offering PSW readers a special 25% discount. Click here. For a more detailed introduction to the Trend Following Trading Model newsletter and trading system, read this introductory article. – Ilene

And while I’m at it, here’s the newest free download from Elliott Wave International:

The How to Spot Trading Opportunities eBook features 47-pages of easy-to-understand trading techniques that help you identify high-confidence trade setups. Senior EWI Analyst Jeffrey Kennedy shows you how some of the simplest rules and guidelines can be used as powerful trading tools. Created from the $129 two-volume set of the same name, this valuable eBook is offered free until April 23, 2010.