1. Using the Crossing of the 3 & 8 EMA to Time entry into the SPY, IWM, STOCK AND OPTION POSITIONS
Jack Leibel Nov 20, 2013

2. Disclaimer
The information contained in this presentation is nothing more than my view on investing in the stock market and is by no means a recommendation to buy stocks described within this presentation.
This presentation is not intended to replace individual research and your personal decision to act or not to act on anything presented. This presentation is for information only and is not a replacement for licensed investment advice.
Thank you

3. CHOP Periods (Inventory Adjustment) vs. Inflection Points
The market constantly and continuously tests price levels to ensure agreement,
Money management centers take advantage(maybe facilitate) this testing to buy/sell their inventory (Stocks, Options, etc),
This presentation focuses not on the CHOP time period of the market but rather those major trend inflection points. Can we determine when they are about to ensue and how to manage your risk and reward during those periods?,
Assumption: If you can understand when those inflection points are occurring on the upside and therefore feel objectively confident to invest a larger portion of your capital during those periods into the best sectors and the best stocks in those sectors you risk/reward will be higher. Alternatively, if you can understand when the inflection points are occurring on the downside you can reduce your capital exposure and thereby allow for preservation of capital until the market offers a better risk/ reward scenario.

4. 2008 – 2009 Time Period

5. Daily Chart IWM July 2008 to Dec 2009

6. Weekly Chart IWM July 2008 to Dec 2009

7. Daily Chart SPY July 2008 to Dec 2009

8. Weekly Chart SPY June 2008 to Dec 2009

9. The Period
In both the SPY and the IWM Weekly Charts from we find that the weekly charts showed very distinct inflection points with minimal churn
SPY Charts
IWM Charts
The Daily charts indicate that over a similar time period we received many more entry/exit signals
IWM Charts
SPY Charts

10. The Period
In both the SPY and the IWM Weekly Charts from we find that the Trend, once identified, held for an extended period of time
When the reversal trend was identified in May 2008 the investor could have:
Stop buying long positions
Reduced/eliminated peripheral positions
Hedged core positions
When the reversal trend was identified in early 2008 the Trader could have:
Reviewed Short Watch List for opportunities
Reviewed Shorting strategies
Cut losses from long trades
In early 2009 the entry point using the EMA Signal was on March 12th for the Daily SPY, March 13th for the Daily IWM, April 3rd for both the SPY and IWM. Early enough to have sustained a substantial profit by being Long and having the convection to deploy a larger percentage of capital

11. 2012 – 2013 Time Period

12. Daily Chart IWM Nov 2012 to Nov 2013

13. Weekly Chart IWM Nov 2012 to Nov 2013

14. Daily Chart SPY Nov 2012 to Nov 2013

15. Weekly Chart SPY Dec 2012 to Nov 2013

16. The Period
In both the SPY and the IWM Daily and Weekly Charts from period we find that the charts showed very distinct inflection points with minimal churn
SPY Charts
IWM Charts
The Daily charts indicate that over a similar time period we received more entry/exit signals

17. Data Analysis

18. Inflection Points to the Upside
In the 2012 to 2013 Period the IWM Daily Chart led the SPY Daily Chart to the upside 6 X out of 8 opportunities, with a 1 – 11 day advanced notice
If this relationship holds it would allow for early entry into positions which reduces your risk significantly

19. Inflection Points to the Upside
For the 2012 to 2013 Period; The entry points using the 3 EMA crossing the 8 EMA showed the following percent moves versus the theoretical maximum potential moves for each cycle
Seven (7) cycles in 12 months
Using the 3 X 8 EMA Signal averaged 55% of the theoretical Max Move

20. Inflection Points to the Upside
For the 2012 to 2013 Period; The entry points using the 3 EMA crossing the 8 EMA showed the following percent moves versus the theoretical maximum potential moves for each cycle
Seven (7) cycles in 12 months
Using the 3 X 8 EMA Signal averaged 58% of the theoretical Max Move

21. Inflection Points to the Down Side
In the 2012 to 2013 Period the IWM Daily Chart led the SPY Daily Chart to the down side 4 X out of 7 opportunities, with a 1 – 2 day advanced notice

22. Inflection Points to the Upside
What rules can we apply that will aid our investing?
What rules can we apply that will aid our trading?
Examples of Rules:
On the SPY Daily Chart - When the 3 EMA crosses above the 8 EMA perform following steps:
On the SPY Weekly Chart - When the 3 EMA crosses below the 8 EMA perform following steps:
And the same issues would apply for the IWM Charts
Other:

23. Recent Examples of Application

24. Gold and the Miners
Still Not an Entry Point

25. GoldCorp-GG I was looking at Silver and Gold miners, had some minor
positions and after looking at these two charts decided to
change course. DUST Anyone?

26. 2 Day Option Trade: OAS
Sold a Nov Put for $ 12:28 PM 11-13
Put expire worthless
Trade Initiated

27. 2 Day Option Trade: OAS Reasons for taking the trade:
OAS is an oil & gas company with exceptional growth opportunities in the Bakken
My take on the spike down in price is that they would bounce due to a short term
reversal and/or the underlying value of the company would be quickly reflected in
the stock price
The S&P and IWM were indicating strength via the 3/8 EMA- therefore no
downward pressure from general market bias
The premium credit of $ 0.47 (~1%) for 2 days of risk seem a high risk/reward
The last piece was the 3 EMA crossing over the 8 EMA on the 60 minute chart –
and my belief it would hold for 2 days

28. 3 Day Option Trade: DUST

29. 3 Day Option Trade: DUST

30. 3 Day Option Trade: DUST Reasons for taking the trade:
DUST is a Bear 3X Gold Miners ETF
Gold and the Gold Miners have been in a long term down trend
This down trend appeared to me to have another leg down; therefore I was
looking at DUST for a trading opportunity
I use 2 and 3 X type ETF for very short term trading purposes
The weekly chart indicated support for DUST via MACD and 3 and 8 EMA
The daily chart indicated another entry point:
The MACD indicator Slope show support for entry
The 3 EMA crosses over the 8 EMA to confirm entry point
The premium credit of $ 0.60 (~1.7%) for 3 days of risk seem a high risk/reward

31. 27 Day Option Trade: COG
3rd signal
2nd signal
1st signal

32. Thank You