Rich Trend Trader's Blog

January 3, 2013

BUY Re-Entry Signal Off Of The CASH (50% Long Positions put into Cash) Signal Issued EOD 01/02/13

Filed under: Trend Timing Model — Rich Trend Trader @ 3:11 am

The market did not waste anytime moving higher and issuing a re-entry signal to put the cash positions back into long positions.  These CASH signals are pretty elusive but they work well when the market decides to correct a significant amount.  However, the market has quickly moved to levels that are a prerequisite for another CASH signal with all trend model indices moving above their upper Bollinger (20,2) band as well as their previous 20-day highs on closing basis.  A better technical indicator will include either the VIX closing below its lower Bollinger band, or either the BPSPX or NYMO closing above their upper Bollinger band which has not occurred.  Maybe the market has a significant amount of rallying left in it before another correction as was the case in the beginning to the middle of Sept 2012.

MARKET UPDATE (2/27/2013): The 1485 level on the S&P500 looks to be the local low for this move down.  The RSI (14) divergence on the 30-minute S&P500 chart shows the typical bottoming process during a correction in an uptrend.  The RSI (14) on the 30-minute chart when to dipped to around 18 or 19 when the S&P500 hit 1497 on 2/21 and then went around 27 when the S&P500 hit 1487 on 2/1487.  The divergence continues when the RSI (14) was above 30 when the 1485 level was hit.  For short term traders the RSI (14) level on the 30-minute chart above 70 is a sell signal.  I am leaning toward the market making a new high above 1529 before another sell-off and potentially a SELL signal but I am just sitting on my long positions and continuously bemused by the impending doom that has been predicted my many for the past 4 years.  One day it will come and my trend system will signal the correct side of the trade to be on.

MARKET UPDATE (2/25/2013): The market has sufficiently sold off to put in an indication of a local low in the area of the current levels.  Two of the trend model indices have closed below both their previous 20-Day low and lower Bollinger (20,2) band while the VIX has closed above its upper Bollinger (20,2) band as well as both the BPSPX and NYMO closing below their respective lower Bollinger (20,2) band.  My prognosis (which will probably be obliterated by the market) is for a small rally on either 2/26 or 2/27 with an eventual low in the area of 1475 on the S&P500 before the market proceeds back higher above 1530.

MARKET UPDATE (2/20/2013): Although there is a close below the 5-Day low on several of the trend model indices, the technical indicators for the VIX, BPSPX, or NYMO has not satisfied the new requirements that I have established for a CASH signal.  I would however, suspect that the market may target the previous 10-Day or 15-Day lows before an eventual rally or further downward moves will produces a SELL signal.

MARKET UPDATE (2/1/2013): Market near a local top?  The COMPQ has closed above its upper Bollinger (20,2) band with the VIX/TNX (stockcharts.com $VIX:$TNX) closing below its lower Bollinger (20,2) band.  However, I have been focusing on the action of the VIX rather than the VIX/TNX in historical studies so the next week or so will give a datapoint for the VIX/TNX action.

MARKET UPDATE (1/17/2013): The market continues to grind higher and I am not looking for a correction of substance until either the VIX closes below its lower Bollinger (20,2) band or either one of the BPSPX or NYMO closes above their respective upper Bollinger (20,2) bands.

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