what we do
Our focus is on the development of proprietary geodesic models that characterize the behavior of leveraged long/short ETFs in pairs trades using first principles of Hamilton-Lagrange-Euler mechanics. Because of tracking errors & daily compounding phenomena, equal weightings of leveraged ETFs in a pairs trade are virtually never 50-50. Daily data & graphics will show subscribers where neutral pair weightings have moved along the path of the pairs geodesic thereby providing multiple market direction & re-balance indicators.
SDS-SSO Model Alert - June 22, 2009
| Dear Blogger,
with the market taking breather from rallying for the last 3 months, the strategy i will follow is likely to buy the SDS-SSO pair on days when the market rallies. whichever particular weighting you choose to position your pair based on your tolerance for risk, overweight SDS. when the market rallies during an extended pullback, you will buy SDS cheaper. if you don't want to wait for the day to buy, perhaps overweighting SDS more so and schedule purchases when cash is available is a reason approach.
my current position is 70% SDS & 30% SSO. the pair will grow without purchasing which means the weighting of SDS will increase as the pullback extends. this is a conservative approach at this point because i'm not ultra weighted. just remember, as the price of SDS increases, the neutral pair weighting for SDS will decrease. i reference the weightings data in the spreadsheet.
here's an illustration, visualize ascending a ladder. each step you take up, the further you are from ground or equilibrium. risk rises but so does the reward. keep that in mind. this approach is satisfying when i maintain a good amount of cash on the sidelines in case i need to take profits and reverse direction. the cash is like someone holding my ladder for saftey as i ascend in risk. this strategy works in reverse, as we have seen, during extended rallies.
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Disclaimer
Equity Informatics is a developer and service provider of proprietary financial equity pricing models & trading methods. The company familiarizes subscribers with the basic thesis of our models, provides subscribers with daily neutral pair weightings and methodologies on how to use the data as intended. subscribers shall not share any information obtained from equity informatics with any other party. use of these services are granted only to and intended for the benefit of the subscriber. Equity Informatics does not offer the sale of equities nor do our trading models constitute trading advise. It is incumbent on potential clients to perform due diligence and seek a professional financial adviser to help you determine whether subscribing to the company's services are suitable for your financial situation and level of risk. No guarentees of performance are expressly or implicitly offered nor does Equity Informatics guarantee the accuracy of market information used to provide model data to our client. equity informatics does not assume responsibility for lost principal, lost gains or tax consequences.
Copyright (c) 2009 Equity Informatics, LLC. All Rights Reserved.
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