Method Overview For Our Trading Decisions
- Daily Bias – A proprietary formula is used in order to provide us with the highest probability for a daily direction. Components such as The Institutional Index, SPX daily cash close, Total Market Put/Call ratio, Volatility Index, and Current TICK/TRIN are our primary tools. Although we will not go into detail of weight for each component in our equation, we wanted to clarify that the daily bias direction is NOT based on technical charting. Unlike other online services that provide stock picks, we focus all of our efforts into the SP500 Index since we primarily trade the ES emini futures markets. However, the same daily bias can be applied to the S&P correlated markets such as SPX options, SPY ETF, along with the @ES futures contracts. The daily bias is measured from the NYSE opening price to closing price (expected market pressure to buy dips or short rallys).
- Swing Positions – The primary picks for swing trades are normally pulled from our top-ten longer term portfolio picks. This is due to the scenario of taking advantage of pullbacks and playing covered calls against our long term positions. However, you dont have to have a long term position or only use a covered call option play in order to take advantage of our current pick. (ie: if APPL is going to pullback from $150 and expected to hit around $145 very soon, shorting the stock or buying a put are two other well utilized choices. Furthermore, we will also find other market candidates (such as the Volatility Index or Dollar Index) that can become ripe for being a high probable trade. However, we do our best to keep it exclusively focused on our top-ten longer term portfolio choices.
- Annual Portfolio – Our annual portfolio is designed to seek out the highest-probability stocks to be high-flyers for the upcoming fiscal year. The goal is to continue beating the S&P performance each and every year. The starting period for each year is based on the fiscal year (1 October thru 30 September) when many fund managers and large institutions reallocate positions and cash each year. The last quarter of each year also provides the best opportunity for a profitable position heading into the calendar year (starting in January). Looking back over the last few decades, the probability for each year having a profitable fourth quarter is hovering above 70%. So starting a position out with statistics like these in your favor – become very obvious why we use the fiscal year.
Key Points of Interest
The above information was created to provide our subscribers with a better understanding of our logic used to approaching the markets. This is not intended to provide subscribers with in-depth formulas or other market data for our trading strategies. But rather to clarify each segment and to weed out the insecurities used by other online market advisories that often base decisions on simple charting techniques or seasonality picks.
Our “Market Fundamental” section is designed to give a current overview of the important events that are impacting the markets. This section is designed to provide a cut-to-the-chase approach and eliminate the fluff of what other news commentaries seem to include. The fundamental commentary is updated once a week while the sectional breakdown (psychological, seasonal, etc) is based on monthly data and is updated the last week of each month. Market fundamentals tend to have slow moving adjustments and we have found that the weekly fundamental overview combined with the 30 day view of different components works well together.
The current “Sector Sentiment” is data pulled from eToro which gathers information based on percentage of buyers/sellers (ie: 49/51 in favor of gold will give an upward bias based on the date it changed sides). This information is not proprietary to Edvesting nor do we have input on any factors that produce the current bullish or bearish sentiment direction. We decided to place this section on the membership page for further confirmation of a direction when things all line up together.