Rich Trend Trader's Blog

November 20, 2012

Trend Model BUY Signal Issued End of Day 11/19/2012

Filed under: Trend Timing Model — Rich Trend Trader @ 3:48 am

Market action on 11/19/12 was sufficient to cause a Trend Model BUY signal to be issued.  Note that the CASH (50% Short Positions put into Cash) signals on 11/14/12 and 11/15/12 saved a significant amount of draw down on the current signal.  Personally made ~12% in my ETF brokerage account and nearly 10% in my mutual fund accounts selling the market short on the 10/23/13 SELL signal.

Would not be surprised by and hope for a retracement of the market rally off of the low made on 11/16/12 to buy into the current BUY signal.  Typical retracements are on the order of 50% which would put the S&P500 around 1365.  This does not always happen but will hold off on half of my account capital for this level and depending upon the short term oversold conditions based upon the 30-minute chart that I look at everyday http://stockcharts.com/public/1001240/chartbook/233040110.

MARKET UPDATE 12/18/12: The small pullback mentioned in the previous update was shallow and now all trend model indices (RUT/SML, MID, and SPX) are above their upper Bollinger (20,2) band and have closed above their previous 20-Day high.  Also, the BPSPX has close above its upper Bollinger (20,2) band and the VIX:TNX closed below its lower Bollinger (20,2).  Other technical indicators that I have been examining are the Aroon Oscillator (20) and Stochastic RSI (20) on each trend model index which closed at their most extremes of 100 and 1.0 on each today.  In many cases these are indicators of a local top in the market but I have not done an exhaustive study to create a trend rules for this situation.

I have been playing with options as the trading vehicle in my taxable account.  Bought 1 contract of June/13 call on the IWM 5% below the strike price on 12/13 (78.00) when the 30-minute RSI on the S&P500 dipped below 30.  Sold that contract today when the 30-minute RSI on the S&P500 when above 70 for an 18.23% gain in 4 days.  Will be exploring options as the primary trading vehicle in the future given their potential for excess gains for successful signals.  For instance, if I was to have bought the May/13 call contract on the IWM 5% below the strike price (75) on Trend Model BUY signal day 11/20, the gain as of 12/18 would be 42.59% based upon settled prices given by bigcharts.com.  Much higher gain then buying the underlying index or the leveraged ETF/Mutual Fund.  It should be noted however, that a significant loss can be realized for situations in which the signal goes against you.  Therefore, I am progressing slowly to learn without getting killed in the process.

MARKET UPDATE 12/13/12: A decent market pullback would not be unexpected given that the trend system that I use as a part of my model gave a buy signal this week.  This system has not beat the S&P500 since 2009, including year to date, and the big market players seem to have them nicely pegged to asset strip their trading members.  Right on cue and as I type the market looks to be making a vertical move down and the trend system is once again severly negative on its long call.

MARKET UPDATE 12/05/12: The market has ran up off of the local low set on 11/15/12 without much of a retrace on a closing basis.  A typical retrace on a closing basis is around the 50% level as mentioned above but this is not sitting around the 1384 level on the S&P500.  In some cases this retrace only occurs on individual trend model indices and not necessarily the S&P 500.  Therefore, the RUT 50% retrace level is now ~795 and the MID ~973.  Still holding 50% of my portfolio levelaged long and waiting for a retrace on a closing basis around the levels mentioned above or another trend model SELL signal.

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

November 16, 2012

2nd CASH (50% Short Positions put into Cash) Signal Issued EOD 11/15/2012

Filed under: Trend Timing Model — Rich Trend Trader @ 12:10 am

The trend model indices (RUT/SML and MID) closed below their respective lower Bollinger (20,2) band with their respective 5-Day RSI below 20.  The requirement for a CASH signal during a trend model SELL signal (at least 2 indices closing below the lower Bollinger band and respective 5-Day RSI < 20) has been met.  Therefore, the rest of short market positions is to be closed and put into cash on 11/16/12.  Valuation indicators have drop below the required level for a trend model BUY signal along with all indices (RUT/SML, MID, SPX, and COMPQ) closing below at least their previous 10-Day low.

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

November 14, 2012

CASH (50% Short Positions put into Cash) Signal Issued EOD 11/14/2012

Filed under: Trend Timing Model — Rich Trend Trader @ 10:55 pm

The trend model indices (RUT/SML, MID, and SPX) closed below their respective lower Bollinger (20,2) band with their respective 5-Day RSI below 20.  The requirement for a CASH signal during a trend model SELL signal (at least 2 indices closing below the lower Bollinger band and respective 5-Day RSI < 20) has been met.  Therefore, 50% of the short market positions is to be closed and put into cash on 11/15/12.  A market low is not neccessarily indicated by this occurance but historical data indicates that this requirement provides better overall returns over the long term.

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

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