Friday, January 24, 2014

IPM Trade Matrix - Trade 2 (Part 1)


Market realized the risk that we were highlighting on this blog for over a week now. Markets topped within IPM top window and then failed to rally above that level again. Since yesterday was the last day of the IPM top window, it gave way to a sharp decline today. This decline changed all the initial bullish estimates. Now we will adapt to the situation as it arises.

One good thing that this experience has taught us is that the IPM Turn window really works and IPM Trade Matrix is a very robust trading strategy. It can adapt to different market conditions rather quickly and therefore, can generate results in any market. We will see how it performs over the next few months.

Trade 1 Ends and Trade 2 Starts

SP500 (1/22/14) = 1828
DJIA (1/22/14) = 16197

Long TNA at 76.25 (original) ==> 76.6 (new) ==> Exit at: 78.6 ==> +2.6%
Long FAS at 92.30 (original) ==> 91.6 (new) ==> Exit at: 88.4 ==> -3.5%
Long TSLA at 171.2 ==> Exit at: 177.2 ==> +3.5%
Long positions were added on 1/14/14 & 1/16/14 based on IPM Bottom window expiration and low risk scenario

Summary of Trade 1 = +2.6%

Long TZA (short ETF) at 16.55
Short positions were added on 1/23/14 based on IPM Top window expiration and subsequent break below critical leve (risk realized)

Condition: Next IPM Window is a Bottom and is 3+ weeks away. High within IPM turn window and no new high.
Trigger (Updated at End of Day on 1/9/14): Decline below 1835 (SP500), below 16400 (DJIA) and below 2473 (Global Dow)
Note: Although Nasdaq and Russell 2000 did not break below, 3 indices confirmed the trend
Profit Target: 1770

Stop: Rally above SP500 = 1849, DJIA = 16498, Comp = 4246, Rut = 1181 (3 of 4)
Trailing Stops: EW & Trailing stops will be determined by 1/31/14 
Typical IPM Trade Matrix Risk: 1.5%
Actual IPM Trade Matrix Risk: 0.7% (Entry = 1835, Exit = 1849, Risk = 0.7%)
Risk Reason: No significant risk because upcoming turn date is a bottom.

Applicable Rule: If next minor IPM turn window is within 2 weeks then wait for a confirmation break before exiting longs - Rule number 2 triggered. Exited longs and added shorts.

Note: IPM Trade Matrix Trades will be posted in the first half of 2014. This is an experiment to understand and enhance the capabilities of this Matrix.

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