The QQQQCrash+ with Stocks
90301 views

Login to Bookmark
DESCRIPTION:

Date updated:08-25-2009

In the last system we demonstrated that a combination of the QQQ Crash system with the 3x2 system produced some good results backtested. And since we posted the system, it actually triggered a trade on Tuesday, the day after Christmas, which was successfully exited on Wednesday at the close after the QQQQ had 2 up days.

The system works even better when applied to stocks. We added one more twist when playing it with stocks – to only buy stocks that are gapping down the day the system triggers. It actually works fine without that condition but so many trades trigger that its not realistic to play it in practice. As you'll see from the simulation below, the system works remarkably well, playing on the long side only, in the bear market years of 2000-2002. Its a great way to play volatility.

So here's the system:

BUY: at the open when a stock closes 1.5 standard deviations below the 10 day moving average of its lows on the prior day AND when its gapping down

SELL: at the close when the stock has had 2 up days in a row.

symbol name last price % change open
  • +
  • CSCO
    Cisco Systems
  • $23.68
  • -1.33%
  • $23.85

29 successful trades out of 36 occurrences for an average return of 4.49%. Last trade was on November 28-29, 2006 for a +5.7% gain.

People owning CSCO also tend to own: AAPLAMDDELLGOOGIBMINTCMSFT

  • +
  • AAPL
    Apple Inc.
  • $200.51
  • -2.65%
  • $204.51

25 successful trades out of 34 occurrences for an average return of 2.75%. Last trade was July 13-18, 2006 for a 1.67% gain.

People owning AAPL also tend to own: AMDCSCODELLGOOGIBMINTCMSFT

  • +
  • BBBY
    Bed Bath & Beyond
  • $37.11
  • -0.75%
  • $37.14

25 successful trades out of 32 occurrences for a 3.61% average return per trade

People owning BBBY also tend to own: CAKEEXPGEMSFTXOMGRMNVLO

  • +
  • BEAS
    Bea Systems
  • $0.00
  • 0.00%
  • $N/A

25 successful trades out of 31 occurreces for a 5% average return per trade. Average holding period: 4.4 days.

People owning BEAS also tend to own: AMGAMTBCRBEAVCERNCOGNDBD

  • +
  • BRCM
    Broadcom Corporat
  • $29.16
  • -2.93%
  • $29.51

23 successful trades out of 33 occurrences for an average return per trade of 4.02%.

People owning BRCM also tend to own: CTSHGOOGINFYMRVLPTIREDFSAY

  • +
  • AMZN
    Amazon.com
  • $128.99
  • -1.75%
  • $130.41

30 successful trades out of 38 occurrences for an average return per trade of 5.24%

People owning AMZN also tend to own: AAPLAMTATHRBEASCTSHEMCGOOG

  • +
  • DELL
    Dell Inc.
  • $15.87
  • -1.18%
  • $15.98

34 successful trades out of 39 occurrences for an average return of 4.42% per trade

People owning DELL also tend to own: AAPLAMDCSCOGOOGIBMINTCMSFT

  • +
  • IACI
    Iac/interactiveco
  • $19.61
  • -0.86%
  • $19.72

28 successful trades out of 34 occurrences for an average return per trade of 4.61%

People owning IACI also tend to own: EXPEMCDVRTXXECCELGGTRAD

  • Page 1 of 2
  • 1
  • 2
previous next

Results: Simulated on Nasdaq 100 stocks from 1997 until December, 2006, 1987 occurrences, 1402 successful trades, 70.56% success rate.

Average return per trade: 2.17%
Average holding period: 5 days

1997: +50%
1998: +30%
1999: +78%
2000: +145%
2001: +3%
2002: +41%
2003: +48%
2004: +17%
2005: +5%
2006: +14%

The system triggers about 250-300 times a year.

latest articles | popular forums
Cramer's Take on Headline Stocks...

Not a Stockpickr member? Join the community today -- for free.Regardless of why a stock is in the news, it never hurts to hear what a professional investor has to say about...

11.20.09 | 11:48 AM
Jim Cramer's Portfolios of the Week

By Roberto Pedone Posted on Nov. 20, 2009 According to Jim Cramer, options expiration is driving the current market selloff. He pointed out that the only stocks that we...

11.20.09 | 08:09 AM
'Fast Money' Portfolios of the Week

By Roberto Pedone Posted on Nov. 19, 2009 According to CNBC’s “Fast Money” traders, the stock market is showing no signs of stopping its current bull run. Joe Ter...

11.19.09 | 11:13 AM
Squeezing the Shorts: Earnings G...

By Jonas Elmerraji Posted on Nov. 18, 2009 There are plenty of reasons for stocks to have the attention of short-sellers. Waning financials, a deteriorating business mo...

11.18.09 | 12:36 PM
more articles
The Presidential/Political Thread
01.02.08 | 08:05 AM From author Dave Cox
Been a While If Anyone remembers...
11.20.09 | 15:40 PM From author Soulja Bear
General market Technical Analysi...
11.14.07 | 22:55 PM From author ZA
Nymph's Trading Daily Trading Diary
04.13.09 | 01:10 AM From author Trading Nymph
more forums
recent answers | popular answers
bubble(0)
today 's lists
Analyst Upgrades

Analyst Upgrades or Estimate Increases for Nov. 20, 2009. Read more here. more

52-Week Lows

Here is a list of some of the biggest stocks that hit 52-week lows on Nov. 20, 2009. more

Stocks With Unusual Option Activity

Unusually active options can often indicate that a major event in a stock is about to take place, or that unsophisticated investors (using options in lieu of leverage) are ... more

show all today's lists