Rich Trend Trader's Blog

September 25, 2012

CASH (50% Long Positions put into Cash) Signal Issued EOD 9/25/2012

Filed under: Trend Timing Model — Rich Trend Trader @ 11:51 pm

All trend model indices (RUT and/or SML, MID, SPX) closed below their previous 5-Day low on 9/25/2012.  I have been considering complimentary technical indicators for the CASH (50% Long Positions put into Cash) signal to reduce the number of whipsaws as follows:

– At least 2 trend model indices close above their upper Bollinger band (20,2) with the 5-Day RSI being greater than 80.

– The Aroon oscillator (20) is equal to 100 and any 1 (preferably the RUT and/or SML) or more of the trend model indices.

Note that the above conditions were satisfied on 9/13/2012 when all trend model indices closed above its respective upper Bollinger band, their respective 5-Day RSI values were above 80, and the Aroon oscillator was equal to 100 on the RUT and/or SML and MID.  The requirements above would have eliminated the whipsaw signal on 6/26/2012 and gave a partially valid signal for the 7/11/2012 occurance.

A valid (profitable) signal will see at least the RUT and/or SML move down and close below its previous 20-Day low and lower Bollinger band.  However, should any trend model index close below its previous 15-Day low prior to a trend model SELL signal, then a partial long re-entry trade should be initiated considering the potential for a invalid signal using the 20-Day low.

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