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June 03, 2009

Turn, Turn, Turn
by Joseph Russo

Since making some minor trade filter adjustments to our LEVEL-V trading protocols in early May, we decided to allocate part of our morning tasks to a spate of back testing to see just how this proprietary short-term trading methodology was performing since making the adjustments. To our delight, the results of our findings have been extraordinary.

We have listed the rather impressive trade stats directly on the chart below. Although the system performed well prior, it clearly shows marked performance improvement following our adjustments.

Futures traders faired the best with a $20,090 gross profit per single full size futures contract traded throughout the period. While short-term (NON-LEVERED) ETF traders captured a 27.8% gross profit return from the Dow's close of 7224 on March 15 as the index itself has only advanced 20.8% from this period.

Granted, transaction costs and the like for (NON-LEVERED) ETF's would have likely proved it more prudent just to buy and hold from 7224 however those using LEVERED ETF's came out far ahead of the underlying performance of the index itself.

To everything - Turn, Turn, Turn... There is a reason - Turn, Turn, Turn...
Just as there is a season for everything under the sun, there is also a natural season of cyclicality for various trading strategies. Although medium-term counter-trend strategies are clearly frustrated with performance since the one-way rally commenced from the March low, our short-term counter-trend tactics at LEVEL-V have performed phenomenally well.

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Joseph Russo
Chief Editor and Technical Analyst
Elliott Wave Technology

Joseph Russo, presently the chief editor and analyst for Elliott Wave Technology, has been studying Elliott Wave Theory, and the Technical Analysis of Financial Markets since 1991 and currently maintains active member status in the "Market Technicians Association." Joe continues to expand his body of knowledge through the MTA's accredited CMT program. Having passed the Level I examination in November of 2004, Joe is now preparing to begin study for his Level II exams. Upon successful completion of an exhaustive level III examination he will have earned the industries highly regarded designation of Chartered Market Technician.