Top Advisors Corner

David O. England: Ask the Professor Part IV...

David England

David England


Q. Professor, what charts are you watching to signal global opportunities?

A. Last week, I introduced my proprietary “Simple Simon” buy signal. As a trader, Investor and Financial Educator, I have used and taught dozens of indicators in the last twenty nine years.  My goal: perfect my trading system with no more than three factors, that leads to HPTs, higher probability/profitability trades. 


For a Simple Simon Sell Signal, all conditions must happen:

  1. Price must be trading below the 30 Simple Moving Average-blue line.
  2. Price must be below the short-term trend line (you must draw.)
  3. Have red Chaikin Money Flow (CM) bars growing larger for three consecutive days.
  4. Confirm with the MACD Histogram in negative territory.

Let’s analyze the group performance leader (EWZ) for previous and current short trades.

Very important, my favorite trades are short or puts-options.  Why?  Securities often fall a lot quicker than they run.  I view trading as a business and not a hobby so time is valuable.  

I cut my teeth shorting in 2000. I was so blessed to have a fantastic mentor, Dean Adam to help light my journey.  I hope my Simple Simon Sell Systems helps to light yours.

Key Points on EWZ…

A.    After several months, the price broke under the 30 SMA (blue line) and trend line (red line) and after a week was confirmed with three red CMF bars and a negative MACD Histogram.  A SS Sell Signal was generated.  The price dropped but in a couple of days, short covering hit and the price went up.  A protective stop locked in a small profit.

B.    The price broke under the trend line (red line) and 30 SMA (blue line) but was not confirmed with three red CMF bars. A SS Sell Signal was NOT generated.

C.    Early in November the price dropped under the; 30 SMA (blue line,) long-term trend line (black line), and red CMF bars.  A SS Sell Signals was confirmed with a Negative MACD Histogram.

The trade is still live with the price forming a (Bearish) descending triangle. A protective trailing stop is important to lock in profits in case short covering hits. If current support is violated, I am looking for an additional drop of at least ten points-a strategy for a future column.
 

One key point, many times securities run in threes so I like to see a couple of pullbacks before shorting.  Note the higher percent drop with C compared to minimal drops with A and B.
 
Keep in mind, no system is 100% and neither is mine.  Yes, I have my critics, everyone does.  The majority are ones that have systems with 8-10 items to consider.

Next week, I wrap up this series with my Global Economies Performance chart to see if any new opportunities are developing. 

Learn how stop losing and begin making money like many of my Training Academy students.  Each Tuesday, my members receive a list of long and short scan candidates-a very profitable feature for many!

Send your questions to eyeonthemarket@outlook.com.  If selected, you will receive two weeks of my daily posts-on me!  

David O. England
Davidoengland.com