January 4, 2008

Another CRASH -
 SBV Oscillator does not miss it
+19.5% (291 points) on the S&P 500

This week SBV chart example is a continuation of previous example on December 28, 2007 where the last SBV signal was "Sell Short". In this week's example we use the same settings that were already used by showing the consistency of our trading system over the long period of time.

This week SBV chart example is based on the 60-day SBV(20) S&P 500 chart.

Chart 1. Relationship between the SBV oscillator and index reversal points. S&P 500 index. 60-day view. 1 bar = 1 hour. SBV(20)

It's Simple and profitable
Use SBV to see when to Buy & Sell

In our trading example, we applied the following simple system which is based on our SBV indicator:

1. Once the SBV indicator declines below minus 20% (the indicator will now show green), we enter a short position (if we are not already short);
2. Once the SBV indicator advances above minus 20% (after having been below that level), we will enter a long position (the indicator still shows green);
3. Once the SBV indicator rallies above plus 20% (the indicator will now show red), we enter a long position (if we are not already long);
4. Once the SBV indicator declines below plus 20% (after having been above that level), we will enter a short position (the indicator still shows red);
5. If the SBV dropped into negative territory and started to rise without hitting the signal line, close the short position when the SBV is back in the positive territory, and stay in cash until a new buy signal is generated. Vise versa for a long position.

Table 1: Trades based on the 5-rule (additional stop-loss rule) system.

Open Trades				Closed Trades				Profit (points)
Time	Motivation	Trade	Index	Time	Motivation	Trade	Index
11/07/07	rule #4	Sell Short	1490	11/13/07	rule #2	Buy to Cover	1465	+25
11/13/07	rule #2	Buy	1465	11/14/07	rule #4	Sell	1485	+20
11/14/07	rule #4	Sell Short	1485	11/27/07	rule #2	Buy to Cover	1415	+70
11/27/07	rule #2	Buy	1415	12/03/07	rule #4	Sell	1473	+58
12/03/07	rule #4	Sell Short	1473	12/06/07	rule #5	Buy to Cover	1482	-9
12/06/07	rule #3	Buy	1495	12/11/07	rule #4	Sell	1487	-8
12/11/07	rule #4	Sell Short	1487	12/20/07	rule #2	Buy to Cover	1453	+34
12/20/07	rule #2	Buy	1453	12/27/07	rule #4	Sell	1483	+30
12/27/07	rule #4	Sell Short	1483				1412	+71
Total:								+291

1 point on S&P 500 = $50 on 1 E-mini S&P 500 futures contract

100 points on S&P 500 = $5,000 on 1 E-mini S&P 500 contract

200 points on S&P 500 = $100,000 on 10 E-mini S&P 500 contracts

Note: The 20% level for the SBV indicator was determined in relation to the prevailing market conditions at the time the trading examples were selected. In order to establish the optimal critical levels for the SBV indicator, traders should consider the current market situation and review a chart history of prior volume surges including their magnitude (i.e., the level the SBV indicator reached).

Our charts are unique in that they give traders the option to choose specific chart settings that best fit their personal trading styles and risk tolerance. Traders can thus develop and test their own trading systems. On our charts, you can scroll back in history to test any system you created.

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