Monday, April 28, 2014

IPM Trade Matrix - Trade 8 (Part 3)

Market Overview

Although SP500 did not reach its target, TZA rallied much more. Today in the morning, TZA profit objective was hit. After that point, IPM Trade Matrix requires trailing stops to be tightened i.e. trailing stop criteria changes to being more aggressive.

This afternoons rally triggered that trailing stop. As a result, IPM Trade Matrix got out of the trade. This trade generated ~11% profit in 4 days. Now we can rest for a couple of days and re-evaluate the market.

IPM Trade Matrix's next trade will be a short trade. We just have to wait for the setup. Market is setting up for a something big over the next couple of months. Earnings have not be spectacular, unemployment data was much worse than expected and housing numbers were outright bad.

Under these circumstances, Fed's FOMC meeting is scheduled for Wednesday. In that meeting, Fed will likely continues its monetary tightening. This taper announcement will be followed by April job numbers. If Friday's data is bad, it could open the flood gates. We will try to position for the trade based on information of the upcoming IPM turn window and IPM Trade Matrix triggers.

BAsed on historical performance of the IPM Trade Matrix, we are hopeful that next trade will washout the 18% loss we incurred due to WIIW (Weekly IPM Influence Window).

IPM Trade Matrix 2014 Trades

TRADE - 1: (Long) = +2.6%
TRADE - 2: (Short) = +9.3%
TRADE - 3: (Long) - Non IPM Trade Matrix trade -0.2%
TRADE - 4: (Short - 1/31/14 to 2/5/14) +7.25% 
TRADE - 5: (Long - 2/11/14 to 2/22/14) = +9.8%
TRADE - 6: (Long - 2/22/14 to 3/07/14) = +11.7%
TRADE - 7: (Long - 3/18/14 to 4/11/14) = -18.1%

TRADE - 8: Short
Long TZA (Inverse ETF) at 16.24, Exit at 17.5. Profit (w/o Options) = 7.8%, Profit (w/ Options) = 11% 

When: Top within IPM Turn Window - Date info e-mailed to subscribers
Next IPM Turn Window: Bottom 
Trigger: SP500 = 1877, DJIA = 16490, GDOW = 2515
Supporting Indicators: 8/4 Test completed to the downside. Downtrend in effect.  

Profit Target 1: 1820
Profit Target 2: 1760

Stop: SP500 = 1886 , DJIA = 16575 , GDOW = 2525
Trailing Stops: - 
Typical IPM Trade Matrix Risk: 1.5%
Actual IPM Trade Matrix Risk: 0.5% (Entry = 1877 , Exit = 1886 , Risk = 0.5% )
Risk Reason: No clear decline pattern so far. Earnings surprises.

Applicable Rule: 
  1. Sell (1/2) at profit objective 1 to minimize draw-down
  2. No Trade in opposite direction
  3. Do not go long or short without trigger to prevent losses by market moving against you.  
  4. Observe stop-losses to minimize draw-downs
  5. If stops are hit ==> Wait on the sidelines for new opportunity near IPM Turn window

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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1 comment:

  1. I don't want to give away a future turn date ... please email me ... I confused about the next long turn date and what you just reflected here... you can publish what you want from that conversation if you see fit to do so... but I don't want to offer that up for non subscribers without your blessing.



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