About RumWave - Read Me

What is RUM Wave?

The RUM Wave it the title I've given to my proprietary market analysis system.  It stands for Reversion to the Unified Mean (RUM).  The "wave" portion of the title refers the theory that large markets tend to cycle in waves.  It IS NOT Eliot Wave. The goal of the RumWave is to exploit the changes in wave direction and position trades in equities that mirror the Dow Jones Industrial Average.  The expected holding period is 10 to 20 business days, but holding times may differ significantly based on market conditions.

Armed with the knowledge of when the market will shift directions, we are able to capitalize on the upward moves and miss the downward moves.  By trading a leveraged ETF we can quickly compound returns resulting in percentage gains that easily outpace standard benchmarks.

Risk Profile

Because of the leveraged nature of the trading vehicle I use, this trading method should be considered "HIGH RISK".  

Who I am (Disclaimer)

I am not a professional or certified financial adviser! .  This blog is strictly market commentary (for legal purposes this is to be considered a newsletter) that I started for the benefit of friends that were interested in my method.  Any trades you make are your own, and should not be based solely on information found within this blog.

Information found within this blog is in no way to be considered personalized financial advice.  Consult your investment professional before placing any trades.


  1. I'd like to try your system because it looks very simple and seems to be very profitable. Would it work also with ETFs based on S&P or small caps or it has to be DOW? Do you use stop loss and could you tell what's the winning/loosing trades ratio?
    Thank you.

    1. Hi Boris! The RumWave was built around a DJIA ETF (triple leveraged). The reason I use the DJIA is because sometimes small caps start to decline before the MegaCaps. This is one of the things I look for. So, trying to use a small cap ETF may not provide the "pad" of time (usually about 1 or 2 days) that a DJIA ETF would give you. I do not uses stop loss. I prefer manual trading. The window to buy / sell on the up-waves is about 2-3 days, so there is no need to rely on automation. If you are going to play the downside with a short position (UltraWave) then you will have to be a little quicker on the trigger. The sell signal I gave my close friends and posted on the mid-day blog yesterday only had about half of a trading day for a window of execution. Winning / loosing trade ratio for the RumWave is 5/5 (100%) for CY 2012. The UltraWave numbers are a little skewed because I didn't start it until halfway thru the year. It has had one trade that resulted in a loss (-5.3%). However, I think I have figured out how to mitigate that particular problem in the future... it worked yesterday! Thanks for your question and thanks for reading!

  2. Thank you very much for your reply. Do you use Direxion or ProShares ETFs? If you don't use stop loss then how would you limit your risk holding triple leveraged ETF in case of unexpected event happening?
    P.S. I'm impressed how accurate your recent signals were. Looking forward to new buy/sell signal.

  3. I trade a symbol called UDOW (long) or SDOW (short). They are ProShare products. The reason I don't uses a stop loss is because I've been "stopped" out of good trades in the past. Also, I consider my entry points to be of very high confidence based on my backtesting. Of course, flash crashes and other unpredictable events can wreck the plan but I liken it to being hit by a rogue bus while walking down the street.. it's just your day, man. I may reincorporate a stop in the future however after I think about it for a while.

    Thanks for the positive comments! I hope to keep giving all my readers opportunities to make winning trades!

  4. There are many type of waves like sin,cos,square,zig-zag but I have read about this first time.Its good to know about this wave.Period of a Wave

  5. Thanks for making your RUMWave signals public.

    I understand the UDOW/SDOW Profunds pair, but C-fund, G-fund, and S-fund references in your notes leave me a little lost.

  6. Found C-fund, G-fund, S-fund, etc. - a QuantShare link led me to TSPTalk.com.