Rich Trend Trader's Blog

May 30, 2012

Trend Model BUY Signal Issued EOD 5/29/12

Filed under: Trend Timing Model — Rich Trend Trader @ 2:40 am

Market action has produced a trend model BUY Signal from the end of day data on 5/29/12.  A failure signal of the current BUY Signal will be for the trend model indices (RUT and/or S&P600, S&P400, and S&P500) to close below the low set on 5/24/12.  A pullback toward some level down toward the 5/24 low would not be unexpected even if the current BUY Signal is successful.

It should be noted that a BUY Signal so far off of valuation lows, the instance in which the CASH signal (50% Short Positions put into Cash) was indicated on 5/14/12, and the first instance in which the small caps closed below their previous 20-day low and the lower Bollinger band on 5/17/12 is somewhat dubious.  However, as indicated previously with signals that seem suspicious I am just going with the flow.

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May 25, 2012

BUY Signals on Individual Indices but Technical Requirements Are Not Being Met for Trend Model BUY Signal – 5/24/12

Filed under: Trend Timing Model — Rich Trend Trader @ 4:06 am

Individual or multiple buy signals have been issued over the past 4 trading days but the technical and/or valuation requirements have not been met yet to issue a BUY Signal.  Valuation indicators on the total market index are still below the required value to issue a BUY Signal during a market rally.  However, the market may be heading toward the previous 5-day highs on all of the indices and the previous 10-day on at least one index which would be an indicator to add to the current short positions should a BUY Signal not be issued.  It is not at all unusual for the market to make rallies off of valuation and technical lows without a BUY Signal being issued prior to a continuation to test or trade below the previous local low.

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

May 23, 2012

Trend Model BUY Signal Still Possible on Market Rally – 5/22/12

Filed under: Trend Timing Model — Rich Trend Trader @ 1:33 am

The valuation indicator on the total market is still below the required value to generate a BUY Signal on a market rally however, those on the individual trend model indices have moved above the required levels for individual index buy signals.  There are a variety of possible short term market outcomes however, the trend model SELL Signal from the end of day on 4/30/12 is still in effect.

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

May 22, 2012

BUY Signal Not Issued, Intra-Day BUY Signal Not Possible, SELL Signal Still Active, 5/21/12

Filed under: Trend Timing Model — Rich Trend Trader @ 4:20 am

Several trend model indices issued buy signals at the end of day on 5/21/12 but the BPSPX (Bullish Percent Index) did not rise compared to the value on 5/18/12 therefore a BUY Signal was not issued.  Also, the valuation indicators rose such that an Intra-Day BUY Signal on 5/22/12 is not possible but a buy signal is still possible depending upon market action going forward.

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

May 18, 2012

Valuation Indicators at Levels Low Enough to Produce and Intraday BUY Signal – 5/17/12

Filed under: Trend Timing Model — Rich Trend Trader @ 1:26 pm

The valuation indicators on the small cap index has gone below the level required to not only produce a BUY Signal on any upcoming rally but have also gone below the required levels to produce an Intra-Day BUY Signal.  It should be noted however, that in order for this to initiate at least one of the trend model indices (RUT and/or SML, MID, SPX) must drop at least 3% and then recover 61.8% of the total drop at the close.  Any index that drops beyond 3% must attain the 61.8% or more intraday rally at the close.  However, if the NDX does this move irrespective of the other indices an Intra-Day BUY Signal will still be issued.  The last Intra-Day BUY Signal was on 8/5/11 were trades would have been initiated on 8/8/11.  Note that this signal was short lived and without much gain due to the SELL Signal end of day on 9/2/11.

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

May 17, 2012

Valuation Indicators Now Below the Required Value to Produce a BUY Signal – 5/16/12

Filed under: Trend Timing Model — Rich Trend Trader @ 2:10 am

A BUY Signal is now possible depending upon market action and technical indicator levels relative to those on 5/16/12.  This type of buy signal, if initiated, is not common but is valid none the less.

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

May 16, 2012

Trend Model Indices Valuation Indicators Still Higher Than Required for a BUY Signal – 5/15/12

Filed under: Trend Timing Model — Rich Trend Trader @ 1:39 am

Although the trend model indices have now produced a close below their previous 10-Day low as an initial condition for a BUY Signal the valuation indicators are still not under the required values on any of the indices.  Either the market continues to trade down more to get valuation indicators lower or rallies back up toward the previous 10-day highs on at least 1 trend model index to produce a SELL Re-Entry Signal off of yesterdays CASH Signal (50% Short Positions put into Cash).

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

May 15, 2012

Potential Local Low Around Current Levels End of Day 5/14/12

Filed under: Trend Timing Model — Rich Trend Trader @ 5:21 am

Updated Title and Language.  Wrote the original at 2am and wanted to state that the conditions set below indicate that a potential local low setup is forming around current levels.  As the signal name indicates, CASH signal (50% Short Positions put into Cash), put 50% of my short positions initiated on 5/1/12 into cash and will hold the rest for either a BUY signal or a SELL Re-Entry signal.

The market action on 5/14/12 shows a potential local low area with the S&P500 closing below its previous 20-day low and the lower Bollinger band.  In addition, the small cap indices (RUT and S&P600) also closed below their previous 20-day low.  Also, the VIX/TNX has twice closed above its upper Bollinger band in the past week.  The combination of at least 1 trend model index closing below its lower Bollinger band, at least 2 trend model indices closing below its previous 20-day low, and the VIX/TNX closing above its upper Bollinger band suggests that the market is near a local low.  This is the setup that I have been backtesting for a CASH signal (50% Short Positions put into Cash) during market declines.  However, any market rally from the lows set on 5/14/12 will not produce a BUY signal given that the valuation indicators are not yet below their required values and the S&P400 has yet to close below its previous 10-day low (all trend model indices are required to close below its previous 10-day low) since the SELL signal issued at the end of day on 4/30/12.  Should the market rally from levels set at the end of day on 5/14/12 a SELL Re-Entry signal rule that I have been working on in conjunction with the CASH signal during market declines will trigger if at least 1 trend model index closes above its previous 10-day high with all other indices closing at least above its previous 5-day high.

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

May 1, 2012

SELL Signal Issued End of Day 04/30/12 – Not a BUY Failure Signal

Filed under: Trend Timing Model — Rich Trend Trader @ 1:48 am

The hits keep coming for the trend model with a SELL Signal being issued at the end of day on 4/30/12.  This is ‘normal’ sell signal from the valuation service data and is a result of the RUT and/or SML, and MID closing higher than the 50-day SMA and EMA with the valuation trend indicator going positive and subsequently going negative.  The valuation service trend is still down which is the primary condition of the signal.  Note that in the historical backtest data to Jan/96, this type of sell signal has never ‘failed’ in that the market traded down such that a trend model BUY signal was issued.  It has been so reliable that I have not even put a failure rule under this condition in my word document but the previous 5-day and 10-day highs along with the high on 4/27/12 for the trend model indices are the market data points to indicate a failure.

Now with that said, it would not surprise me in the least for the market to now subsequently reverse higher and give a failure signal however, going with the trend model and sell all longs and going short in those accounts that allow short trading.  Note that the trend model underperformed the market by a fair amount in the first half of 2011 and historical return data shows periods of relative under performance.  Should the current signal produce a normal buy signal prior to a failure signal, at a minimum the small cap indices will trade back down and close under their previous 20-day low and the lower Bollinger (20,2) bands.  The mid and large cap indices usually, but not always, follow the previous 20-day low and lower Bollinger (20,2) band indicators of the small cap indices.

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

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