Capital Markets Advisor

What is the Capital Markets Trading Advisor?
The conventional definition of a Capital Market has been expanded here to include exposure to the U.S. Dollar, energy, and precious metals. By using appropriate proxies, we can simulate various segments of the U.S. capital markets. The purpose of the RWP Capital Markets Trading Advisor is to provide actionable buy and sell advice for aggressive traders who choose to trade today, and for active investors who want to participate in longer-term price trends.

• Capital Market Proxies: S&P 500 futures serve as the proxy for US stocks, UST 10yr cash and futures for the U.S. bond market, US Dollar Index futures against a basket of six(6) currencies (i.e., Euro, Japanese Yen, British Pound, Canadian Dollar, Swiss France and Swedish Krona), Crude Oil futures for energy, and Gold futures for precious metals.
• Medium-Term Position: Systematic trend-following Buy and Sell signals are based on various entry / exit timeframes. intra-day break-outs, daily closes , and weekly closes.

  RISK NOTE: While trend-following systems usually generate good aggregate performance over time, one can expect to take small losses on more than 50% of trades as stop-loss levels are hit.

• NO-ACTION RANGE (NAR): Without “new” and significant information entering the market, the NAR represents the likely trading range for today. The typical trading tactic is to take no action when the market trades within this range. That is, “fade the NAR bands” (i.e., SELL a rally to the NAR High or BUY a break to the NAR Low). CAUTION: An intra-day breach of either band for an extended period of time (1/2 hour to 1 hour) often indicates that “new” buyers or sellers have entered the market requiring possible action in the direction of the breach!
• Pivotal Price or FULCRUM: This is often a key trading price reference where either (1) considerable trade volume has occurred between buyers and sellers (known as the FULCRUM or modal price) or (2) minimal trade volume has occurred (known as a single print (s)) after a confident (or anxious) buyer or seller has moved prices quickly and traders perceive a valuation change (often occurs after a surprising economic report).
• Aggressive Trading Advice for Today: This advice is offered for investors who need to transact today, or traders who choose to trade today, and is best used early in the session to take advantage of anxious weak hands) ‘offside’ traders. The methodology used is based on the fact that markets trend infrequently (i.e., 10% - 15% of the time). Mostly, market prices rotate ‘back and forth’ around a pivotal price or Modal price (i.e., the price that occurs most frequently) which is eventually accepted as a “fair value” price estimate.

How to use this advice…

1. Without a personal directional bias, use the Pivotal or Modal Price as the prime price reference. If price is above this pivotal price level for 1/2 hr minimum look for opportunities to buy the market, or vice versa if below for 1/2 hr minimum!. Minimal hold period > or < a price (yield) is 1/2 hour.
2. The standard trading rule is to initially fade the NO-ACTION-RANGE (NAR) bands (i.e., sell a rally, buy a break).
3. However, time spent above NAR bands means the market balance is likely changing with traders advised to “go-with” the direction break-out!

   CAUTION: This aggressive trading advice is never be used without STOP-LOSS protection

Today’s Feature Price Chart or Market Profile: Each day, a price chart or profile graphic from a selected market segment is highlighted.

If you any questions about the Capital Markets Advisor please contact your sales representative or Dennis Hynes at dchynes@pressprich.com