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A Great Trading Strategy for 2010

Many global commodity, energy and equities markets have recently experienced 50%+ price moves. After periods of extreme volatility the market volatility usually declines sharply as price moves revert to the long term mean or average.

For example, the S&P 500 Index experienced a 50% decline during the severe 2000 – 2003 bear market. The S&P 500 Index bottomed out on March 11th 2003 and finished 2003 with a positive 26.3% return. Volatility decreased sharply after 2003 as the S&P 500 Index price moves reverted to the historical mean. In 2004 the S&P 500 Index advanced 9.0% and in 2005 the index advanced 3.0%.

We are following a similar pattern in 2009. After a 56% price decline, the S&P 500 Index bottomed on March 9th 2009 and advanced 23.4% in 2009. If the S&P 500 Index follows a similar price pattern to the 2003 - 2005 period, the volatility should decrease in 2010 and 2011 with below average price moves as the index reverts to the mean.

Futures trading involves high risks with the potential for substantial losses. Hypothetical performance results have many inherent limitations, some of which are described as follows. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk and no hypothetical trading record can completely account for the impact of financial risk in actual trading. For example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. there are numerous other factors related to the markets related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results. Option and stock investing involves risk and is not suitable for all investors. Only invest money you can afford to lose in stocks and options. Past performance does not guarantee future results. The Chuck Hughes Inner Circle Advisory trade record does not represent actual investment results. Trade examples are simulated and have certain limitations. Simulated results do not represent actual trading. Since the trades have not been executed, the results may have under or over compensated for the impact, if any, of certain market factors such as lack of liquidity. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown.