After a week of trading the system ran into a rough sell-off and the system performed exactly as expected by hedging out most of the losses.

The following illustrates what a hedge is for the CPO:

The above images (actual trading screen) shows the opening on Friday 4/18/2015 through the close.  In the chart we see the red, yellow green bars (proprietary CPO indicators) which represent slices of time in the market--5 minutes in the above case.  Every 5 minute chunk will be a Red (bearish), Yellow (neutral), or Green (bullish).  At roughly 9:30, a position was entered to "short" 3 contracts of the S&P500 (Click here for Shorting definition)  and at roughly 12:30 those contracts were bought back (a dotted blue line connects the two points indicating a profit).  The system then entered another short position around 2:00 and exited the position just prior to close (a flat dotted red line connecting the two points indicating no gain; red because we paid $3.60 to make the trade). 

The above is exactly what is defined in the Risk and Profit Disclosure document on what you can expect in this CPO and last week as a great example of hedging while keeping the long positions.

The best thing about the hedging strategy is that it is profitable on its own and represents years of development to get a hedging strategy right--without the hedging strategy in place we would still have good performance, but risks would be higher.

Lets review our previous statement:

"The S&P is attempting a rally above 2100 but struggling to gain a foothold.  The COT is negative but the market has made a nice floor around 2030.  The current signal is green (as seen above) but historical evaluation suggests waiting for one more day before entering new long positions. 

Overall, there are a number of reasons to Hold and an equal number of reasons if not more to take some profits.  In general, timing is too difficult...you have to pick the right time to exit and then the right time to get back in (the harder part).  In modeling millions of data points, its a complete wash--in other words, for every time the market is timed perfectly, there is an equal number of time
s it is not. 

As far as the above chart is concerned, the COT is showing the hedgers are

about even in their thoughts, while small traders a bullish and professional speculators are somewhat bearish.  With all eyes on earnings and a mixed bag of macro and technical indicators, a HOLD is still in play."

Not much has changed, even with a 300 point drop in the DOW.  The markets are neutral at the moment and a HOLD is still recommended.  The Commitment of Traders is currently negative, but just barely and the market is simply trying to find direction; the markets will likely float higher until a catalyst is found to give the market a path of least resistance as most investors are on the buy side historically.

If you have any questions or if your advisor has any questions, please text me at 704-999-7844 or email me.  Some emails are blocking my responses so if I don't respond right away please try again stating you haven't received anything and I can try another email.