Rich Trend Trader's Blog

July 29, 2011

Another Unoffical CASH Signal EOD on 7/28/2011 – Potential Market Low Indicators

Filed under: Trend Timing Model — Rich Trend Trader @ 3:04 am

The S&P600 and S&P400 have once again closed below their lower Bollinger band (20,2) limit, the 5-day RSI values are under 25, and the CCI are below at least -175.  These indicators in of themselves are those that I have been looking at exclusively for a CASH signal during a falling market and within a SELL signal.  I do not have the confidence yet to trade positions long using these indicators although looking at historical data there is an indication that most trades would out perform the regular BUY signals off of a market low.  A few instances however show that the market can continue down to much lower levels although the above conditions have been met.  It should be noted that the valuation indicators are not yet to the levels required for a BUY signal and therefore the market must either continue lower to generate the required levels or it will turn back up potentially giving another SELL failure.  Of course, some amount of a relief rally is also possible without there being a SELL failure signal.

I have been browsing other indicators for potential clues with respect to areas of local market lows.  A popular indicator that I have read about is the VIX with respect to its upper Bollinger band (20,2) level.  Many technical traders indicate that when the VIX closes above its upper Bollinger band (20,2) and then back under it is a market buy signal.  As of 7/28/2011 the VIX has closed above its upper Bollinger band (20,2) level for two consecutive days.

Another indicator is the percentage of stocks above/below their 20-day moving average ($MMTW at barcharts.com).  Again, technical traders indicate that when this value begins to pierce the 25 level during a falling market this is an indication of an area of a market low.  This indicator has closed below 25 for the past two days.

Another indicator would be for the trend portion of the trend model to issue a market down or preferably a market neutral signal during this trend model SELL signal.  The current trend model SELL signal has been generated by the valuation portion of the model.  A market down or neutral signal would indicate capitulation which historically is an excellent point to reduce short position levels and take some amount of long positions.  As of 7/28/2011 the trend portion is still in a market up mode.

My personal opinion is that I would be hesitant to hold a significant amount of short positions over the weekend given the obvious focus of CONgress on the reaction of the market with respect to the current charade call budget cut negotiations.  I have been doing better lately than the trend model signal returns by using these developments of CASH signals but am not ready to full implement given the potential risk.  It is generally not advisable to trade out of positions without definite rules to guide the decisions but I have been using the loose indicators that have been described in the CASH signals to generate small profits although the market has generally given flat or negative returns in the trend model signals.  For instance, I am not going to be near a computer most of the day tomorrow but am going to set trade limits to exit my short positions at S&P500 1291 based upon the reaction of the futures market and the obvious pressure in CONgress to do something even if that something is irrelevant (at least with respect to be fiscally responsible).  The big banks will want to continue the gravy train for as long as possible and this administration as well as most others are all too willing to accommodate until they can not.

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

 

July 28, 2011

Unofficial CASH Signal EOD on 7/27/2011 – SELL Signal Still Active

Filed under: Trend Timing Model — Rich Trend Trader @ 5:33 am

That was quick. A CASH signal that I have been investigating during a SELL signal was most likely issued at the end of the day on 7/27/2011.  Both the S&P600 and S&P400 closed below their lower Bollinger band (20,2), below their previous 20-day low, and the 5-day RSI level is below 25.  This has indicated a high potential for a local market low looking at historical data.  It should be noted however, that there have been instances in which the market has went on to make much more substantial lows although these oversold indicators have registered these type of levels.  I would feel more comfortable with trading out of my current short positions (taken the morning of 7/27/2011) if the trend portion of the model would go neutral (it is currently a BUY) or the 5-day RSI level go below 15.  Again, conditions for the current CASH signal have technically been meet but I will most likely not be trading out of my current short positions tomorrow given that I only used 1/3 of my accounts that can be traded intra-day.  I did not trade short any accounts that are only traded at the end of the day given the severity of the decline at mid-day.

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

July 27, 2011

SELL Signal Issued EOD on 7/26/2011

Filed under: Trend Timing Model — Rich Trend Trader @ 2:20 am

The trend model issued a SELL signal as anticipated at the EOD on 7/26/2011.  Will close out the current signal data at the EOD on 7/26/2011.

If the current SELL signal is to eventually produce a trend model BUY signal, at least one of the trend model indices will close below it previous 20-Day low.  I have an alternate CASH signal during a SELL signal as well as a CASH signal during a BUY signal.  We shall see if this is activated should the market continue to move lower.

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

July 26, 2011

SELL Signal Likely EOD on 7/26 in Market Closes Lower

Filed under: Trend Timing Model — Rich Trend Trader @ 2:53 am

A particular type of SELL signal will most likely be issued at the EOD on 7/26 if the stock market finishes lower.  This SELL signal is the same as that issued on 5/17/2010.  If the market finishes higher tomorrow, a SELL signal is still possible going forward given the valuation portion of the trend model is in a down mode.

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

July 22, 2011

Unofficial BUY Re-entry for Unoffical CASH Signal EOD 7/21/11

Filed under: Trend Timing Model — Rich Trend Trader @ 4:02 am

The S&P600, S&P400, and S&P500 all closed above their previous 5-day high and above the high on the Unofficial CASH signal day.  This is a re-entry signal for the cash position.

The valuation portion of the trend model however is still down and could still give a SELL signal.

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

July 19, 2011

On The Verge of Another SELL Signal

Filed under: Trend Timing Model — Rich Trend Trader @ 2:20 am

Market action at the end of day on 7/18/11 have produced an internal trend model signal such that a SELL signal could be issued.  The simplest form is for all of the trend model indices to close lower on 7/19/11.

It should be noted that 5 of the previous 6 SELL signals of this type have ‘failed’ in that the market did not move down to valuation levels low enough to issue a BUY signal before moving higher.

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

July 13, 2011

Unofficial Trend Model CASH Signal Issued EOD 7/12/11

Filed under: Trend Timing Model — Rich Trend Trader @ 3:13 am

All three trend model indices (S&P600, S&P400, and S&P500) closed above their respective upper Bollinger band (20,2) limits and have all subsequently closed below their previous 5-day low.  This is a signal that I have been working on to lower risk off of market local tops but have concluded at this time to only trade have of my total position into CASH when this signal is issued.  I have found that with the current rules that I have been looking at there are a fair number of whipsaws with this signal however, it has proven to slightly improve performance over many signal instances.

There will most likely be some type of counter trend rally from current levels over the next day or two before the market heads lower should that be the ultimate directions short term.  A re-entry signal will be issued when the first trend model index closes below its previous 20-day low with 5-day RSI values in the 20 or lower range (preferably lower than 20).

Another possibility is that the market just heads higher with a close above the previous 5-day high on any one index negating the CASH signal.  It should be noted however, that I have found instances in which this in of itself can produce a whipsaw in that the market then reverses back lower with another close below the previous 5-day low with a CASH signal or just producing a SELL signal.

Of course the market can just keep going down from current levels to make another low most likely above the S&P500 1258 level should a SELL signal not be issued during the current market correction during a BUY signal.

I am personally going to be looking for a rally to approximately ~1330 level on the S&P500 to trade into CASH with 1/2 of current long positions.  Be mindful of a close above the previous 5-day high that will negate the current unofficial CASH signal.

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

Blog at WordPress.com.