As I continue to assemble a TLT trading basket here’s 2 more views of the TLT/SHY situation that may help readers appreciate the utility of the Z Score approach embedded in the PDQ Dashboard, the ETFR and Project Z, each of which uses a slightly different variation of the algorithm.
Space and time prevent me from really drilling down on the fine points of the Pairs Model Analysis, but this Spring we plan on posting a series of interactive webinars to better acquaint readers with our upcoming fee based product line. One important similarity between the PDQ Dashboard and the Pairs Model Analysis is the use of the equity curve (D) to evaluate the risk curve of the pair in question.
The exciting feature yet to integrated into THE PDQ and the Pairs Model is that by the Spring deployment these will be REAL TIME products, making them viable day-trading tools. Just as an aside , the lower chart of the TLT/SHY ratio (StockCharts) on weekly bars shows the pair is approaching historic lows, likely driven by the FED’s aggressive low interest policy on TLT yields. As TLT/SHY yields continue to fall towards parity the opportunities for longer term trading setups increase and we want to be prepared when the door opens.
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