Rich Trend Trader's Blog

November 23, 2010

11/22/10 Update: Correction May Be Complete, Watch for Whipsaw – BUY Signal Still Complete – Edit 11/23/10

Filed under: Trend Timing Model — Rich Trend Trader @ 4:58 am

EDITED/UPDATED: I should not have put information in the 11/22/10 post with respect to stops below the 11/16/10 low given that it is unlikely that the trend model will give a sell signal until some type of substantial rally first.  It was late and I have been in AL looking at homes to buy for the past 3 days.  I would not be surprised and actually have been looking for the market to trade back down toward and close below the 11/16/10 low to register a close below the previous 20-Day low.  This would indicate the general area in which the current correction will be complete and some type of rally back toward the 1227 high will take place.  Whether the market trades back above this level or not is unknown with respect to previous historical market action and trend model data.  Most EW blogs are still indicating a move back above 1227 with some targets in the 1250+ area.  The market action off the the local low did not create concrete signals that the correction may be over but started to with the action on the S&P400 as indicated below.  I did caution on a whipsaw action given that these type of market actions combined with previous trend model internal data and technical analysis suggested that a move back down was possible.  I am still holding long positions and would actually welcome a close below the the 11/16/10 low to get fully long.

 

 

The S&P400 closed above its previous 5-day high signaling the possibility of the market correction being complete.  As indicated in previous updates, a portion of my portfolio was back in @ 1196 and @ 1187.  Was looking for a close below the previous 20-day low to go full long but as I have seen in historical data the close above the upper Bollinger band limit and subsequent close below the previous 5-day low does not always indicate a larger correction going forward.  I will be looking to get full long at anything under 1195 from here with a stop under the 11/16/10 low on a closing basis.

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

November 17, 2010

11/16/10 End of Day Update: Trend Model Sell Signal Unlikely, Looking for another Long Entry Position – BUY Signal Still in Effect

Filed under: Trend Timing Model — Rich Trend Trader @ 8:12 am

Internal trend model signal data indicates that a trend model SELL signal is not likely to be issued based upon historical data.  The market can still trade down from current levels and for low risk long entries it would be preferred to see the market go somewhat lower prior to any rally of significance.  The current internal trend model signal data suggests that a local low will be in the area after two or more (preferably all) of the trend model indices close below their previous 20-day low.  These target values will over the next several days move up from their current levels and begin to align with the positions of the 50-day moving averages and the lower Bollinger band limits.  For the small, mid, and large cap indices the following levels are the 20-day lows going into the end of the week:

S&P600: 367.35 on 11/18 and 368.33 on 11/19
S&P400: 812.01 on 11/18 and 818.15 on 11/19
S&P500: 1171.17 on 11/18 and 1171.70 on 11/19

Should the market trade down to these levels without finding near term support, the market may trade down in a deeper correction given the analysis provided by several EW blogs.  PUG (http://pugsma.wordpress.com) has an especially good technical assessment on the 11/16/10 end of day post that provides a visual as well as technical discussion of the near term support levels that are required to hold for a continued market rally above the 1227 level on the S&P500.  I will be taking the shot at full long positions in all portfolios should the market trade down and the trend model indices close below the previous 20-day lows as indicated above.

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

November 16, 2010

11/16/2010 Mid Day Update: Waiting Until the End of Day Data

Filed under: Trend Timing Model — Rich Trend Trader @ 6:14 pm

The market action has traded in a manner suggested by the previous closing above the upper Bollinger band limit, a subsequent close below the previous 5-Day low, and the ‘on balance volume’ dropping below the previous down tick on 11/12/10.  As I noted, if I had not liquidated all longs by the end of the day on 11/5/10 I would have been contemplating trading into cash on 11/15/10.  Todays action suggests that the previous 10-day low targets are well within reach and potentially the previous 20-day low values as well.  The current market action with respect to trend model signal data, Bollinger band action, and previous 5-day low values are similar to that on 8/11/10.  At that time the market eventually traded down to close below the previous 20-day low on all trend model indices on 8/24/10 which I suspected was the area of the market low at the time.  However, I was still working on the Bollinger band, previous 5-day low, and other technical indicators to determine the exit and entry indicators for market action taking place right now.  That is, the baseline trend model is still a BUY (although todays market action could change that with the end of day data) but the market has traded above what would be considered overbought conditions and are now in a correction phase of some type.  Therefore, I am sitting on my current longs and will provide updates according to the trend model signal and any EW analysis indicating the current wave positions for the market.

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

November 14, 2010

Partial Positions Taken @ 1196 on the S&P500, Caution on Long Entries – BUY Signal Still in Effect

Filed under: Trend Timing Model — Rich Trend Trader @ 1:05 am

The S&P500 has moved back down to the Bollinger band (20,2) which has provided general support since the latest BUY signal.  However, all trend model indices (S&P600, S&P400, and S&P500) have close below their respective previous 5-Day low after all closing above their upper Bollinger band limit.  Caution is advised and if I had not traded all longs out by the end of day on 11/05/10 then I would be contemplating trading into cash based upon these conditions.  It should be noted that during market rallies the condition of closings above the upper Bollinger band limit and then a close below the previous 5-Day low can occur several times before the one instance in which a significant decline takes place.  I have not had too much satisfaction with respect to applying other technical indicators in order to reduce the whipsaws using this method.  I am however, using several EW blogs as an indication that although the market may trade down some more from here, a rally back toward and most likely above 1227 on the S&P500 will take place prior to a more significant correction.  Taking a partial position on the long side at 1196 on the S&P500 is based upon some EW pivot point analysis, the Bollinger band value for the S&P500, 5-Day RSI levels well below 50, and the previous 5-Day low.  The next target should the market continue down in the current correction will be the 10-Day previous low on one or more of the trend model indices.  This value will be at 1183.56 on the S&P500 will happens to be the next pivot target from some EW blog analysis.

Therefore, I will be taking more long positions should the market trade down to the 1184 area on the S&P500.  I will be monitoring trend model index levels and EW analysis results for any indication that the current correction has ended near the current levels.

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

November 11, 2010

New Long Positions @ 1196 on the S&P500 With Portion of Portfolio

Filed under: Trend Timing Model — Rich Trend Trader @ 9:17 am

Many Elliott Wave counts are indicating a shallow pullback for the current expected move down.  General targets are in the mid 1190’s to mid 1180’s on the S&P500.  This would put the S&P500 back near the Bollinger band (20,2) which has been a general area of support for the current move off of the late Aug/10 low.  The current previous 5-day low on the S&P500 is also at 1198.34.  Therefore, I am going to take a portion of my portfolio and trade back into long positions should the S&P500 reach 1196 over the next 2 days.  Regardless of whether these positions are established or not I will continue to monitor EW count targets, trend model indicators, and market technicals for long entry positions or cover any long entries established should the character of the market change against the current trend model BUY signal and expected EW shallow pullback with a continued rally for a market top above 1230.

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

November 4, 2010

Decisive Break Above the Upper Bollinger Band Limit on 11/04/10 – BUY Signal Still Valid

Filed under: Trend Timing Model — Rich Trend Trader @ 10:02 pm

The S&P600, S&P400, and S&P500 all decisively broke above the upper Bollinger band (20,2) limit at the close on 11/04/10.  I am liquidating all longs and sitting into cash to watch and see the character of any pullback, align the levels with various EW counts (http://pugsma.wordpress.com and http://www.tradeyourwayout.com), and trend model indicators that I have been looking at as qualitative trading indicators.  CAUTION: None of this is currently a part of my mechanical trading system but when certain conditions arise and there is profit in the portfolio is not a bad idea to sit in cash and watch the market.

I have been working on an upper Bollinger band break on a closing basis on at least 2 of 3 S&P600/S&P400/S&P500, 5-Day RSI levels above 75 on all S&P600/S&P400/S&P500, and the close below the previous 5-Day low as a SELL or CASH signal.  Have yet to be sufficiently successful but again I am aligning the current trades with 2 of the 3 conditions being meet along with the market indices being near the top of the EW counts I referenced above.  May have some better information concerning this trading strategy going forward using various technical indictors to increase the success rate.  Nothing is ever perfect but am not going to use what I have so far due to the whipsaws that are unacceptably high.

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

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