What is the WiseTraders OVI Short, Medium, and Long Term Market Timers?
The longer term timing indicator (OVIsi) was designed with an institutional portfolio in mind, and is based on prolonged bullish or bearish conditions. As such it is a slow-moving indicator which did not turn during the Pandemic downturn of Feb-March 2020. While research shows that 70% of S&P constituent stocks perform better when traded in alignment with the OVIsi, Guy felt it wasn't giving enough immediate juice for our discretionary style of trading, so he started to create shorter time framed market timers.
The medium term indicator (MMT) is very much geared for what people would call a "swing trading" time-frame of days/weeks. Presently it's the one we're focusing on. Its optimal use is either during oversold conditions or when the indicator is persistently positive without being overbought. In these conditions quantitative studies confirmed an optimal stock setup is where an individual stock's OVI has lurched from deep negative to deep positive. In practice other bullish OVI scenarios will also be favourable, in conjunction with other bullish Big Money Footprints and our EDGE trade plan.
In its current form, the shorter term indicator (SMT) contains value, but with the good performance of the medium term market timer, Guy wants the shorter term timer to provide different information in terms of being a "louder" and faster signal, and also whether it can highlight if conditions are optimal or sub-optimal (ie. smooth or choppy) for our style of trading. This is being worked on.
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Does the OVI lead the medium term market timer (indicator) or lag it, or neither?
The Medium Term Market Timer is specific to the S&P500 index, but will also have relevance to individual stocks, particularly of course those which are S&P 500 constituents. It is independent of the OVI, but we are using it in the way by which it has ...
If there are no stars/low number of stars for a stock, then how can there be statistical integrity behind the OVI indicator?
No stars simply means the stock is not in the S&P 500. Low stars simply means that in a more recent segment of time, that the stock price has not correlated with its own OVI as well as other stocks have performed in the same time period. It is a ...
What is the OVI?
The OVI is Guy's proprietary trading indicator. It’s a unique tool that you won’t find anywhere else. The letters OVI actually stand for ‘Options Volatility Index’, and the technology itself relies on complex algorithms and billions of data ...
If a stock is a 1 star, does that mean that the OVI correlates with the stock 20% of the time, and if its’ 2 star, it correlates 40% of the time etc?
The stars are relative to each other. 5* means that for the latest period under examination (and the periods are not short term) a particular stock is in the top quantile of stocks that correlate with their own OVIs on an empirical basis. The ...
Is the direction of the OVI important or just that it is either in positive or negative territory?
It's all about support/resistance and breakouts together with OVI, AND with Big Money Footprints (at least a couple). For guided discretionary trading, you don't read the OVI on its own, it is not a daily indicator. Look for persistence in its ...