Does anyone use this setup?

Originally posted by Vishnu
System: if stock is up 10%, buy at close and sell at market the next morning.

I ran the system on a basket containing all Nasd 100 stocks. Time frame started one year ago today up until today. I started with $100K and allocated $5K per trade .

Result:
Winning trades: 36%
Losing trades: 64%

Starting capital: $100K
Ending capital: $75K

I made some variation to see if results would improve:
a. Sell at close the next day
b. wait for profit target or stop to get hit

Nothing worked.

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Hmm I like this better:

System: if stock is up 10%, <b> sell short </b> at close and <b>buy </b>at market the next morning.

"I ran the system on a basket containing all Nasd 100 stocks. Time frame started one year ago today up until today. I started with $100K and allocated $5K per trade . "

Doing the opposite will result:

Winning trades: 64%
Losing trades: 36%

Starting capital: $100K
Ending capital: $125K

Not taking into account commissions :)

Am I the only one who saw this?

Having a GREAT time trading (shorting) the market here. Sky Scrapers - CIEN on Friday - cover today. IMNX and PDLI yesterday - cover today. New shorts on 5 Sky Scraper NYSE stocks today (BHI CPN APC APA and CSC) - Short overnight and due for a beating after a great first week back in action :)

Trade Smart

Tony
 
Tony, I am curious whether you took any bottompick plays during this stretch, or you were so bearish on the broad market that it was all shorts, thanks :-)
 
Would you have shorted OVER on Fiday last week as it was up over 10%? To quote a friend of mine..."Stock looks Strong!" I ask cause I did but it kept on going higher. My friend wanted to go long but would not out of principal since it would be taking the opposite side of my trade. What a nice guy huh.
 
I was just being silly on alalyzing the stats provided in that example. I don't short moon rockets, it's against my religion :)

Your buddy seems to know his sh*t. OVER did look strong that day.
 
fwiw during the several months that i subscribed to Kens room, i can only recall him taking the overnite setup a handfull of times.. maybe four or five.. he looks for strong/weak stocks that are closing on the days High/Low on very high volume.. also, the market has to support the direction of the expected gap.. personally, ive never traded the setup as i dont hold overnight.. good trading..

-qwik
 
Tony:

Did you stop out of CPN and CSC?

Great plays on APA/APC/BHI btw, I went long in energy this morning but didn't flip enough when it moved back to resistance level . . . Left 1 point on the table for WFT . . .

Be careful about the 2PM energy news tho . . .
 
Originally posted by Hitman
Tony:

Did you stop out of CPN and CSC?

Great plays on APA/APC/BHI btw, I went long in energy this morning but didn't flip enough when it moved back to resistance level . . . Left 1 point on the table for WFT . . .

Be careful about the 2PM energy news tho . . .
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Nothing like carrying 7000 shares short into a gap up day :(

Yep, got stopped out on those dogs CPN and CSC.

I worked hard on managing those positions and was able to do well on the entire basket.

Attached is a screen shot of my positions P&L. I haven't done the math yet, but I think I carried about 4K profit from yesterday. So you need to add that to the number.

Could have been worse, could have been better, after all, I have mixed feeling about the performance. CSC hurt me mentally, so I took the profits in the other positions too fast.

Tony
 

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Originally posted by Hitman
Tony, I am curious whether you took any bottompick plays during this stretch, or you were so bearish on the broad market that it was all shorts, thanks :-)
More...

Kinda hard to pick bottoms when everything is over extended :)

I just liked the reward/risk ratio on the Sky Scrapers from Friday through Today. There were lots of top Bollinger potential reversals, so I took those trades.

In over-extended markets (lower or upper BB), I like to play either Sky-Scraper or Bottom Fisher. If a market is in mid-range, then I'll play both at the same time. I also look for good New Kid and Power Trader setups in any market condition. A few scalps on the QQQ a few trades from my watch list, some basket trading and here you have it all :)
 
Regarding the original subject, buying a strong stock at the close and selling at the open is a technique as old as the hills. It was either Justin Mamis about 1980 or Gerald Loeb in the 60's who told a tale in a book about someone who had a seat on the NYSE visiting the floor of the exchange in the last 5 mins of the day to buy a stock closing near its high and selling it the next morning.

Now, seeing as someone mentioned OVER last Friday, may I take a tangent. Please see the chart I have attached. After the big gap and futher rise it plateaud and fomed a long thin triangle. Something I have noticed in such formations is that the volume declines, but often picks up just before the breakout forewarning the break. You can see it in this chart starting around 1:45.

In this case it looked like it was going to break higher, but this is by no means certain and is often more ambiguous looking. Now my question. I have been thinking of playing such patterns by placing both buy-stop and sell-stop orders in the breakout zones. One gets filled and the other is there for protection in case the breakout is a fake. This removes the need to make a guess about the direction of the breakout and lets the market decide for you.

Can anyone with more experience than I comment, particularly on how frequently breakouts from such formations quickly reverse, rather than go on to score substantial profits. I am not a scalper. but am looking for position trades on an hours to days basis.
 

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