Our indicators have done quite well for us. Since the beginning of 2016, when we began to lean heavily on our proprietary indicators, 22 out of 28 indicator-based ETF option trades have been profitable (gross return, not counting commission). Of the 6 that were not profitable, one was exactly break even. So just 5 of the 28 trades were unprofitable.

The average gross return for the 28 trades is 14.6 percent in an average holding period of 16 calendar days. The median gross return is 15.3 percent and the median holding period is just 7 calendar days.

Had we traded the underlying ETFs instead of options, the winning percentage would have been even better. 25 of the 28 trades would have been profitable. In other words, our indicators were correct about the directional move of the ETFs 25 times out of 28 trades. When we trade options, the erosion of time value could lead to a loss even if the ETF itself moves in the direction of our bet.

Since the ETFs don’t have the leverage of options, the average gross return is only 2.7 percent. But for ETFs, in just 16 calendar days a 2.7 percent gain for an ETF would be considered a significant move.

Frankly the indicators have proven to be far better predictors of short-term moves than we as analysts ever could be, so we will continue to lean heavily on them going forward.

Once or twice a year, we have to recalibrate our indicators to ensure they capture as much current data and variables as they can. It is a type of machine learning, if you will. Dr. Leeb is currently working on the recalibration this week. In particular, we wish to add China-related data and variables to the indicators.

As a result, as you may notice below, our indicator signals are all between the range of “+1” and “-1.” We did this on purpose because until we finish the recalibration, we do not recommend making indicator-based trades. We suggest viewing these signals as more of an indication of the general direction where these ETFs may move.

There are millions of pieces of data that go into these indicators, so it’s a laborious process to recalibrate them. Dr. Leeb hopes to finish by the end of this week.

Once the full recalibration is done, we expect to be able to have more frequent trades. Stay tuned.