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May 24th, 2016

5/24/2016

This week, we completed a trade-by-trade backtest of the Chaikin Oversold Buy signal on optionable stocks. We'll be putting the results to work forward testing long call spreads and sold puts and put spreads in the coming months. If you'd like get a copy of the trade by trade results, just join the mailing list, with no purchase required. Backtest rules can be found on the blog entry below.

By submitting your name and email, you understand that we are not providing stock recommendations and that this is purely for educational purposes. Our backtests do not factor in trading costs, which can be substantial. Following any trading plan doesn't guarantee future results, and you can lose money. You acknowledge that you are 18 years of age or older and that ChaikinPowerUser.com may contact you via email We will never share your information bwith 3rd parties.

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Backtesting Oversold Buy Signals

5/23/2016

The oversold buy signal is a short term reversal signal, allowing swing traders to establish a low risk entry point for trades lasting days to weeks or for trend traders to add capital to previously established trending positions.

Requirements for an Oversold Buy Signal

Stock trading at an 8 day low
Power Gauge Bullish or Very Bullish
OB/OS oscillator below 30

As an option trader, and one who prefers selling puts and put spreads, the Oversold Buy / Overbought Sell Signal is my favorite to use. But I've never developed a trading expectancy on that signal alone.

Entry Criteria

Timeframe - January 1 - present
Optionablel underlyings trading 1 million shares or greater per day
Power Gauge must be green at the time the trade taken
Money Flow must be green at the time of the trade
Relative Strength must be green
Price must be above the Chaikin Long Term Trend.
Stock must match oversold buy signal requirements.
Earnings dates had no bearing on stock selection.

Testing Parameters

Since Chaikin Analytics is an End of Day system, we entered positions that met the above criteria the following trading day at the close.
We closed the positions 14 calendar days later (at the close) or the first trading day when the exit date fell on a weekend. This was to simulate the typical swing trade
We also sold stocks 30 calendars days after the OSB trading signal (at the close) or the first trading day when the exit date fell on a weekend. This was to simulate the typical holding period for a sold put or put spread.

Typical Buy Candidate

We'll publish results TOMORROW

May 17th, 2016

5/17/2016

In this week's video, we cover market conditions and place an order on Steel Dynamics triggered by a Chaikin Relative Strength Buy Signal. The order filled at the open: BOT +400 STLD @24.46

How Chaikin Analytics Gives Me Conviction

5/16/2016

Last Friday's price action looked pretty dire. A follow through to the downside would have completed a head and shoulders top of the intermediate trend. But there were a couple of clues on the Chaikin Analytics Platform that suggested it wasn't time for "look out below". First, take look at Money Flow on the SPY as of last Friday's close.

The preponderance of green is a possible clue that institutions have been using the pullback to accumulate stock. Our next clue lies in the Power Bars

The ratio of bullish to bearish stocks in the SPY, along with the number of sectors which have mildly to strongly bullish ratios suggest to me that we could see another run up to 2100. Since the Power Gauge is 85% fundamentally weighted, Power Bars can serve as a warning sign if the breadth of bullish fundamentals start to narrow. Now, the ratio is not nearly as strong as it was during the rally of the February bottom and economic indicators, such as jobless claims, will be watched very closely. We'll need a stream of good data to bust through overhead resistance. But, with today's market bounce, I will be looking for Very Bullish stocks in the strongest industry groups to replace portfolio positions that have stopped out in the last 3 weeks.

Best Sector, Best Industry, Best Stock...

5/10/2016

Today, an oversold market bounced after a 2 week intermediate term pullback into strong Money Flow. The market's bullish Power Bar ratio and upward sloping long term (orange) Chaikin trendline make market conditions for me acceptable to consider entering intermediate term bullish trades. XLI (Industrials) has been outperforming the SPY on a 3 and 6 month basis, and it's strongest industry group Aerospace is the second highest rated Power Bar ratio.

Within the Aerospace group, uptrending and Very Bullish DGI pulled back to the midpoint of its price channel over the previous 6 trading days and bounced today. With the market (relative strength) agreeing with Power Gauge, Money Flow persistently green over the last few months, despite some recent weakness, and the OB/OS oscillator giving me a lower risk entry opportunity, this is a stock I'm going to attempt to purchase before the end of the week. I'll set a stop below the 3o Day Moving Average and be willing to take a little short term pain if the pullback continues into the lower part of its channel. I'm this one for at least 3-6 months and hopefully longer.

May 24th, 2016

Backtesting Oversold Buy Signals﻿

Typical Buy Candidate

May 17th, 2016

How Chaikin Analytics Gives Me Conviction

Best Sector, Best Industry, Best Stock...

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Backtesting Oversold Buy Signals