I have developed a simple Tradestation Strategy for the OIH which has produced 73% winners for the oil service holdrs. I cannot back-test the GDX-- gold miners etf-- extensively because the HOLDR is new. But so far it is 7-3 (70% but highly insignificant statistically) and consistent with the OIH action.
My thesis is that gold stocks will trade like oil stocks because they both have underlying commodity prices that trade futures and options actively (making for highly erratic short-term arbitrage and speculative trading).
My method waits for oversold stochastics and a late-day recovery/stabilization in price. You buy near the close and hold for 1 day (close to close).
I believe this is logical as shares who have active futures and options markets tend to exacerbate moves as squeezes tend to be hard and extreme. This system attempts to enter after a hard squeeze and play for a rebound. It will certainly lose its fair share when adverse overnight news hits but positive news can hit too creating a double-upside vs single-downside effect.
Private message me if you are interested in the Tradestation code...
$39.76 (12/15/06)
