Rich Trend Trader's Blog

August 28, 2010

SELL Signal Caution

Filed under: Trend Timing Model — Rich Trend Trader @ 5:13 am

As suspected, the market is attempting to rally back up and above the levels at the end of day on 8/20/10 SELL signal.  The internal signal positions suggest that the current SELL signal may either fail or sustain a healthy draw down before a continuation of the market downtrend should that be the direction it ultimately wants to go.  The trend model data were exactly the same prior to the current SELL signal as that on 10/20/09 and 1/28/10.  The local low, during these SELL failures, occurred within a few days when the S&P600 and S&P400 first closed below their previous 20-Day low.  For the 10/20/09 SELL failure this occurred on 10/30/09 and for the 1/28/10 SELL failure this occurred on 1/29/10.  Therefore, although there is a current SELL signal caution is advised given the tendency of the market to shake out profit and extract capital from the trend model signals over the past 9 months.

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August 25, 2010

Trend Model Indicators Already at Levels Sufficient to Produce a BUY Signal

Filed under: Trend Timing Model — Rich Trend Trader @ 6:00 am

After 2 days of market declines after the latest trend model SELL signal, the buy indicator is already below the value sufficient to produce a trend model BUY signal should the market trade higher tomorrow (or subsequent days when the buy indicator is below the required level) and internal trend model parameters confirm the BUY signal.

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August 22, 2010

Trend Model SELL Signal End of Day 08/20/10

Filed under: Trend Timing Model — Rich Trend Trader @ 10:41 am

The trend model gave a SELL signal at the end of day on 8/20/10.  Internal data presented in ‘On the Verge of a SELL Signal?’ indicates that a higher then 50% chance that a new low below S&P500 1010 will occur.  However, this type of SELL signal produces a higher number of failures then other SELL signals.  The most recent end of day SELL signals that produced failures were on 10/30/09 and 01/28/10.  Therefore, caution is advised based upon the following:

The current SELL signal and recent market behavior align in an uncanny way with that on 01/22/09.  This suggest that a new market low will occur but not after a small rally.  Here are the specifics.

– The market made a high 3 months before the lows prior to the SELL signal on 01/22/09.  The current market high to low has occurred in just over 2 months.  Therefore, there is symmetry in time.

– The market produced an Intraday BUY signal on 10/10/08 which failed using the action of the trend model indices on 10/15/08.  Although not an Intraday BUY signal due to the internal trend model data being 0.02 points too high on 5/24/10, the market action on 5/25/10 satisfied all the Intraday BUY requirements.  If 5/25/10 was classified as an Intraday BUY the trend model indices action on 06/04/10 would have produced an Intraday BUY failure.  Note how the market made a recovery in both instances but this recovery ultimately failed with the market making a new low after 10/10/08 and 5/25/10.  In both instances the market made a recovery above the Bollinger Ling (20, 2) but did not clear both 50-Day moving averages (simple and exponential).

– The market movement back to a new low in both instances produced another Intraday BUY on 11/21/08 and 07/01/10.  This occurred in both cases ~2 – 2 1/2 weeks after the BUY failure recovery high.

– In both cases the market failed to close above the BUY failure recovery high and subsequently sold back down to produce a trend model SELL signal.  The recovery high after the 11/21/08 and 07/01/10 Intraday BUY moved up above the 50-Day moving averages (simple and exponential) and the trend model indices touched the upper Bollinger limit (20, 2).  The RSI on the trend model indices in both instances only became overbought (>70) on the 5-Day RSI.

– The market attempted a rally after the 01/22/09 but did not produce a SELL failure but only by a small margin.  Note that in Jan/Feb 09 the trend model indices did not clear both 50-Day moving averages during this attempted rally.  The S&P500 did close above the 50-Day simple moving average and nearly touched the 50-Day exponential moving average on an intraday basis.

Therefore, using the above data comparisons and several publicly available Elliott Wave sites (bullish and bearish counts indicate that the S&P500 1080+ is a near term rally level) I am going to wait to see if the market rallies such that the S&P500 closes above the 50-Day simple moving average which is currently at 1089.07 but will most likely be moving down in the near term.  Should this rally occur I am going to close out all of my longs and sit in CASH in my personal account until the market produces confirmation data of a SELL failure or continuation of the SELL signal.  NOTE: THIS IS NOT IN ALIGNMENT WITH THE DATA THAT WILL BE PRESENTED IN THE SIGNAL DATES AND INDEX RETURNS.  I will close out the trend model BUY signal the end of day on 08/23/10 as required by the SELL signal.

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August 20, 2010

On the Verge of a Sell Signal?

Filed under: Trend Timing Model — Rich Trend Trader @ 9:37 am

Trend model data indicates that should the model indices (S&P600, S&P400, and S&P500) all close lower tomorrow (or at some point in the future with other conditions also satisfied) a SELL signal will be issued.  There have been 3 instances going back to 1996 in which the internal trend model data have been positioned the same as of 8/19/10.  The dates of the occurrences were 3/7/07 (after the 3 Sigma Day on 2/27/07 and no subsequent SELL signal), 1/20/09 (SELL signal issued the end of day on 1/22/09), and 5/7/10 (after the 3 Sigma Day on 5/6/10 and subsequent SELL signal the end of day on 5/17/10).  Of the 2 historical instances out of 3 the market subsequently went on to make a new local low.

DISCLAIMER: https://richtrendtrader.wordpress.com/disclaimer-on-information-presented-in-this-blog/

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