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General Information and Guidelines
Welcome to Hamzei Analytics SuperHornets v2.1 Trading Service.

SuperHornets v2.1 is a trend following swing-trading system that operates on the premise of momentum reversal and is equally biased going Long or Short. It includes the same trade identification and order-entry capabilities as the original SuperHornets, however we have expanded its repertoire to swing trade up to 18 select issues featuring a mix of exchange-traded funds (ETFs), Big Cap stocks and High Beta stocks in order to cater to a variety of trader risk tolerances.

The SuperHornets v2.1 Active Orders will be updated daily after the close (except when the equity markets are closed the next calendar day). It will feature up to 18 select swing trades, comprised of the following:
      3 Liquid ETFs
      5 Big Cap Stocks
    10 High Beta Stocks

The focus will be on liquid issues most poised for immediate price action.

Auto-Trade Brokers SuperHornet v2.1 Orders
Publication & Updates Guidelines for ETF trades
Our Methodology Guidelines for Big Cap Stock Trades
Our Charts Guidelines for High Beta Stock Trades
Glossary Guidelines for Stop Loss

New subscribers to this trading service are urged to review the Frequently Asked Questions (FAQ) before trading.




Auto-Trade Brokers

We are pleased to announce that PTI Securities, OptionsXpress and American Option Services now offer Auto-Trading for SuperHornets v2.1 subscribers.

Automated Trading is an efficient method that places orders for the customers, based on parameters selected by each client.

PTI Securities understands the most sophisticated investment strategies and provides professional execution capabilities thru its network of off-the-floor staff. PTI brokers are professional strategists with an average of 10 years of floor trading experience.

OptionsXpress was rated Number 1 online broker by Barron’s in its March 10, 2003 issue. The OptionsXpress online order entry screen has the ability to accept complicated orders and they offer competitively priced stock commissions with discounts for active traders.

American Option Services has extensive auto-trading experience. American Option Services is unique in that it offers convenient, value-priced, trading executions in Securities (Stocks and Options), Security Futures(ETF and Single Stock Futures) as well as Commodities (Futures and Options on Futures).

Stay tuned for more broker updates.




Publication & Updates

This online newsletter will be updated on our website daily after the close by 8:00pm PST (except when the equity markets are closed the next calendar day, in which case it will be updated by 6pm PST on the evening prior to the next trading day).

Occasionally, we will notify you, via your email, of recommended changes to the OPEN positions as warranted by the market action.   An example is when we determine that a position should be closed early.

Current subscribers will be notified via their PayPal registered e-mail each time the Newsletter and/or special updates are posted on the website.   You will need your user id and password to login and view the online newsletter and updates.

If a subscriber changes his/her e-mail address, it is his/her responsibility to nofity us to update his/her registered e-mail address in our records. We are not responsible for notifications sent to an out-dated e-mail address.

The Performance History will be updated regularly (beginning after we have our first closed trade) and posted on the website.




Our Methodology

Hamzei Analytics utilizes proprietary sentiment tools as well as quantitative and technical analysis techniques in making its ETF and stock trading selections.   These tools include Proprietary Dollar-Weighted Put/Call Ratios, Active Beta Matrix, Uniform Volatilities Historical Database and SuperHornets v2.1 Trading System.

We use these tools to determine overall market direction and evaluate which sectors are strong or weak.   We then consider the ETFs, Big Cap and High Beta stocks in our universe that comprise the various sectors. Finally, we select the issues most poised for immediate price action.

Our goal is to help traders improve their trading results in a consistent and steady fashion using a mix of Long and Short positions.

It is also our belief that in order to achieve success and longevity as a trader, the following ingredients are essential: discipline, money management and diversification.

Discipline to cut your losses and to book targeted profits; hence our use of trailing stop loss orders.

Discipline to stay within your risk tolerance level.

Discipline to use only risk capital and not over extend yourself financially.

Trading capital should be divided incrementally among several different positions. Consequently, traders are encouraged to allocate their trading capital among the majority of the trade selections, rather than concentrate their funds in only a few selections. Such diversification increases the likelihood that losing trades will be offset by other winning trades.

A mix of bullish and bearish positions also increases the chances of profiting in both up & down markets. Consequently, traders should consider both Long and Short selections.

Traders should also be diversified among different sectors.

We reserve the right to cancel any unfilled entry orders and replace it with another order that we deem more appropriate.




A note about our Charts

Our online charts are in “PNG” format. Depending on your monitor size, if it looks compressed, move your cursor over the lower right corner of the chart and a box will appear. By clicking on the box, the chart will expand and display sharp colors and crisp lines.

The charts will usually depict our SuperHornet v2.1 Trading System proprietary Buy and Sell Short signals, along with technical indicators utilizing volume and price momentum.

When we issue a new entry order for the first time and also when we have a fill, we will post the accompanying chart. However, please note that not all charts for the pending orders and open positions will be updated every night (this service is not intended to replace your charting software). We will update as many charts as we deem appropriate, but not less than once a week.

The Short-Term Market Sentiment section also features a chart incorporating the Wyckoff Method as well as a Timer chart incorporating the McClellan Oscillators for both Adv-Decl issues as well as Up/Down Volume for better identifying short-term overbought and oversold condition in major cap-weighted market indices. These two charts are updated almost every other night.




SuperHornets v2.1 Orders

The initial entry orders are STOP orders, which will enable you to get STOPPED INTO the position, only when the stop price is triggered.   Traders can then remain on the sidelines in a trendless market.

The stop orders for entry acts as an additional filter for confirmation of the momentum reversal.

BUY STOP orders to initiate Long positions, must be placed at a price HIGHER than the current price of the security.

SELL SHORT STOP orders to initiate Short positions, must be placed at a price LOWER than the current price of the security.

From a risk management standpoint, traders should not take a position in an EXISTING position, since conditions may have changed since the trade was first initiated.

Although we suggest orders to be entered as GTC, traders must be aware that the entry stop prices and the trailing stop loss prices normally change every trading day. Each trading day, traders would have to cancel and replace their existing GTC orders to reflect the updated prices.

Some traders may also choose to enter orders good for one day only and re-enter new orders each trading day. However, this process can be more cumbersome than simply changing an existing open GTC order.

Traders who do not update their GTC orders daily to reflect the latest prices generated by the system, run the risk of attaining a less than optimal entry.

Once an entry order is filled, the DAILY Trailing Stop Loss orders are computed and posted on the website in the section titled Monitoring Open Positions. These Trailing Stop Orders are to be entered BEFORE the open of the next market trading day.

For existing Long positions, the trailing SELL STOP orders must be placed at a price LOWER than the current price of the security.

For existing Short positions, the trailing BUY STOP orders must be placed at a price HIGHER than the current price of the security.

The trailing stop loss prices are also normally adjusted after the close of each trading day, however, they may remain unchanged if the security traded within a narrow range for that day.

Some brokerage firms may only accept orders to Sell Short as DAY orders only instead of GTC, due to the firms "Stock Loan" policy. This may result in traders having to re-enter the open Sell Short orders prior to the open of each trading day, until the order is executed. Traders would also need to have their accounts approved for margin trading in order to be able to Sell Short. Please check with your brokerage firm to find out their policy regarding placing Sell Short orders as GTC.




Guidelines for ETF trades

This section features up to 5 liquid exchange traded fund (ETF) selections. These ETFs offer diversification among various sectors or market indices.

Traders can participate in the movement of a particular sector or the general market without having to pick a specific stock.

For Long trades that have moved in our favor, traders may consider taking partial profits when the "next resistance level" is reached and maintain the trailing stop loss on the remaining portion. This strategy allows traders to retain some profits if the position reverses.

For Short trades that have moved in our favor, traders may consider taking partial profits when the "next support level" is reached and maintain the trailing stop loss on the remaining portion. This strategy allows traders to retain some profits if the position reverses.




Guidelines for Big Cap Stock Trades

This section features up to 5 selections on large capitalized stocks. These would be among the most liquid stocks and would not normally be as volatile as the high beta stocks.

The trailing stop loss would normally be smaller (on a percentage basis) than on the other selections, due to the lower volatility.

For Long trades that have moved in our favor, traders may consider taking partial profits when the "next resistance level" is reached and maintain the trailing stop loss on the remaining portion. This strategy allows traders to retain some profits if the position reverses.

For Short trades that have moved in our favor, traders may consider taking partial profits when the "next support level" is reached and maintain the trailing stop loss on the remaining portion. This strategy allows traders to retain some profits if the position reverses.




Guidelines for High Beta Stock Trades

This section features up to 8 selections on liquid high beta stocks. Due to the high beta, these stocks would be among the more volatile selections in this trading service.

The trailing stop loss would normally be larger (on a percentage basis) than on the other selections, due to the higher volatility.

Traders should consider reducing the size of their trades in this section, relative to the other two sections, due to the increased volatility.

For Long trades that have moved in our favor, traders may consider taking partial profits when the "next resistance level" is reached and maintain the trailing stop loss on the remaining portion. This strategy allows traders to retain some profits if the position reverses.

For Short trades that have moved in our favor, traders may consider taking partial profits when the "next support level" is reached and maintain the trailing stop loss on the remaining portion. This strategy allows traders to retain some profits if the position reverses.




Guidelines for Stop Loss

The system uses a proprietary volatility algorithm to compute the daily trading stop loss levels once an entry order is filled.

The trailing stop loss orders are dynamic in nature, meaning that the system recalculates them after the close of every trading day.

The stop orders, when triggered, become market orders, so the actual execution price may be different than the stop price in the event that there is a gap opening or a "fast market" due to news.

Once an entry order is filled, traders should place the trailing stop loss orders in their accounts prior to the open of the next trading day. Traders should not use "mental stops" instead of placing the actual stop loss orders.

If conditions change and we decide to close any positions early, we will post an update and alert you via your registered email.




Glossary

Active Beta Matrix: It computes the BETA for each stock in our Universe vs the most liquid ETFs.

Beta: This is a measure of how a stock's price changes relative to the movement of the market or an index. For example, a stock with a Beta of 2 relative to the S&P 500 will normally increase by double the percentage increase of the S&P 500.

Dollar-Weighted Put/Call Ratios: These calculate the ratio of the total dollar amount of puts and calls traded. This is a vast improvement over the simple put call ratio. You can now know where the “smart money” is placing their bets.


For further clarification about the various trading tools and resources, please utilize our free tutorials and more detailed Glossary on the website.




FAQs (updated 2/1/04) -- Have other questions? E-Mail us at: SuperHornets@HamzeiAnalytics.com


Chat with Fari on TradeStation.com Fari Hamzei writes for CBOE Options Hub on event-deriven basis       Futures & Options for Stock Indices
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