Rich Trend Trader's Blog

May 1, 2013

Trend Model BUY Signal Issued End of Day 04/30/2012

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

All trend model indices have closed above their previous 10-Day high and above the high on 4/15/2013, which was the sell signal initiation day, to produce a Trend Model SELL Signal Failure.  As I did with the current signal, I am going to be scaling out of my shorts during any correction or retrace of the current uptrend from 4/18 and looking for the RUT gap between 4/22 and 4/23 as target area to enter longs during the current BUY signal.  Therefore, my actual returns will again be different than that displayed on the Signal Dates and Index Returns page in which I will close out the current SELL signal data on 5/1/2013.  Note that it was not unexpected for this type of sell signal to fail but with the commercial valuation and trend service being now back into market buy modes, it may be time for a correction of some type to shake out some more retail traders.

MARKET UPDATE (6/7/2013): A Trend Model SELL setup was issued at the end of day on 6/5 which requires all trend model indices (RUT/SML, MID, and SPX) to close lower and at least one of these closes being below the high on 6/5.  However, this type of sell signal since 2009 has failed (a normal Trend Model BUY signal not issued) 8 out of the previous 11 signals.  None the less, I have not been able to do historical research that would solve this issue without adversely affecting overall signal performance.

The NYMO closed below -100 on 6/5 as well.  This has always (12 of the previous instances) caused the market to make a new closing low below the day of the occurrence.  Therefore, it is expected that the market will at some point make this closing low prior to making new highs above the levels seen on 5/22 unless of course this would be the first time that this indicator does not follow through.

MARKET UPDATE (5/31/2013): Once again the $NYMO closed below the lower Bollinger band and lower then the previous instance.  Looking for the market to again make another low below 1630 on the S&P500.

MARKET UPDATE (5/29/2013): The $NYMO has closed below the lower Bollinger band 4 of the last 5 days and each of these are lower than the previous.  Historical data indicates that another market low, even if put in intra-day, is highly likely from current levels but the VIX has closed above its upper Bollinger band.  This is an indication of a local low, even if for only a few days, should it close back within the upper Bollinger band.  I am just letting the BUY signal entry run and trading a small portion of my taxable account with speculative options.  Made ~53% gain (minus expenses) from 5/23-5/28 using SPY call options.  These things can really kill you if you do not have a firm entry and exit plan and should only use a portion (<10%) of you total tradable cash.

MARKET UPDATE (5/12/2013): A correction of some type would not be unexpected given that the $BPSPX closed above its upper Bollinger band on 5/9/13 with the SPX also having closed above its upper Bollinger band last week.  The $NYMO and $VIX as well as the $VIX:$TNX are still a ways away from their Bollinger bands.  The $SPXADP also closed above its upper Bollinger band last week but I again have not been through much of the historical data to determine whether this is significant or not.

MARKET UPDATE (5/7/2013): The market has continued to grind higher and the big shake out occurred in a single day which coincided on the trade day of the current Trend Model BUY signal.  With respect to where the market may find a short term or significant high, neither the $VIX nor the $VIX:$TNX has closed below the lower Bollinger band and are in fact a fair distance away from this level.  The $BPSPX and $NYMO however are fairly close to their upper Bollinger band and the $SPXADP (S&P500 Advance/Decline Percentage), which I have been playing with since stockcharts.com has added this index to its database, has been above its upper Bollinger band the last 2 of 3 days.  It would seem that this alone is an indication of a shallow pullback in the indices should it materialize prior to the other indicators making their move to the Bollinger bands as indicated.

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