Bought some Canadian Gold iUnits (XGD) just before the close yesterday to boost my allocation to my maximum for this setup. That's not normally the way I do it, but I have some portfolio rejigging I needed to do.
As part of that process, I also need to sell some of my equities, including the Japan iShares ETF (EWJ) - for which I now have a bearish signal, according to my new Nikkei setup. But today's reversal is keeping me in until a get technical sell signals. (Since switching to COTs-based mechanical trading, I miss trading off the technicals, so this is lots of fun for me.)
I based the XGD trade on an interesting technical system I first heard of on Stephen Vita's excellent AlchemyOfTrading.com website and blog. It's the TD Sequential System named after its developer, Tom DeMark. Stephen uses it a lot, and I've found it's a great way to study overbought and oversold conditions in various timeframes. For the XGD trade, I bought after a TD Seq Countdown buy on the 60-minute chart.
TD Seq is easy to learn and use, and there's lots of info on the web about it or in Tom DeMark's books.
5 comments:
I came across this blog via 'Traders Narrative' blog spot. Very interesting. Would it be possible for you to send me a copy of your spread-sheet? I don't think there's one up on the blog.....I can't seem to find an e-mail address for you here. Thank for sharing your findings.
David
Hi David,
Thanks for your interest. No problem about the spreadsheet. I've posted my email address here and there on this blog. Here it is: aroslin1@yahoo.ca.
Regards,
Alex
Hi Alex,
Thanks for your blog. I find it very interesting.
I wrote an article on my own blog that you may find useful.
It shows how XGD and EWJ are very tightly correlated, which means selling EWJ and buying XGD may be counterproductive. This article is in my blog archives.
Good call on XGD, by the way, I think you got in at a good time.
Here is the link:
http://goldstockprophet.blogspot.com
Hi Danny,
Thanks for your message. I'll check it out. While EWJ and XGD do have a high correlation - 0.8 (based on the daily open price since 2001, when the XGD data starts) - the Nikkei and gold have a correlation of only 0.1 since 1995 (based on the weekly prices). Didn't check their correlation on daily prices, but that would be worthwhile.
Regardless of that, the diverging COTs signals are what they are, and one doesn't pick and choose which signals to follow in this kind of system.
Best wishes,
Alex
Sent an e-mail alex.
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