Tuesday, May 31, 2011

Alert: Short

8pm ET Tues:  Oops regarding my guess this afternoon.  My system gave a short signal at the close.  I was 99% wrong earlier.  I will be closing my 100% long position and opening a 50% position in TZA, both on the open tomorrow! Sorry for the late notice.  If it gaps up, it works out in our favor though.  For stats, I'll just use the closing price from today.  See ya back here tomorrow.

(Made a new post to get the word out for those who get email notifications)

May Stats and Signals

Stats for May are finalized since the system closed the long position. The short position opened will be counted in June stats.  May finished up 12.99%!  I like to see 5% a month, so to get double digits is a beautiful thing. The system is now up over 28% this year... (better than 5% a month)
8pm ET:  Oops regarding my guess this afternoon.  My system gave a short signal at the close.  I was 99% wrong earlier.  I will be closing my 100% long position and opening a 50% position in TZA, both on the open tomorrow! Sorry for the late notice.  If it gaps up, it works out in our favor though.  For stats, I'll just use the closing price from today.  See ya back here tomorrow.  

12:35pm: We're taking the kids to an amusement/water park for the rest of the day... too nice to be inside . I'm 99% certain the signal will be a hold.  Enjoy!
May signals for archiving purposes...
Apr 26Short 90.80
May 2Hold
May 3Cover 88.09
May 4Buy 84.58
May 5Hold
May 6Buy 84.68
May 9Hold
May 10Sell 91.64
May 11Buy 86.86
May 12Hold
May 13Buy 85.37
May 16Buy
May 17Hold
May 18Hold
May 19Hold
May 20Hold
May 23Hold
May 24Hold
May 25Hold
May 26Hold
May 27Hold
May 30Closed
May 31Short 88.90

Friday, May 27, 2011


3:55pm: Hold confirmed. 

2:45pm:  We've lost the sell/short signals and we're looking at another hold.  Will update later...

10:52am: The system is flipping back and forth between "sell" and "short".  This afternoon should be relatively quiet as the long weekend approaches...which means one of these signals should actually last into the close.  As usual, I will update later with the final signal.

These past few days could not have gone any better. What looked like a BIG loss for the system (and me) has turned into a tiny loss, or perhaps even a small profit depending on how we close today.   We may even get a hold signal indicating more upside next week.

Thursday, May 26, 2011


Another hold signal is on tap for today... it is confirmed.  We are close to a sell signal, so if one wanted to reduce risk, today would be a good day to do it!  System remains all in long.

Wednesday, May 25, 2011

Hold confirmed.

4:15pm: Hold confirmed. 

3:45pm: Today will be another hold signal unless something crazy happens.

2:24pm: Assuming today's SPY high of 132.61 is not exceeded, an SPY close over 132.40 will likely generate a short signal. There are lots of moving parts though, so check back prior to the close for the official signal.  I'm hoping for a hold signal so we can attempt to make some more of our money back before switching signs.  We'll see.

Tuesday, May 24, 2011


I'm expecting a multi-day rally to commence any day, perhaps tomorrow... Today's signal is another hold.

Monday, May 23, 2011


Hold confirmed. Looks like it's gonna be one of those trades. No sell signal today though.

Friday, May 20, 2011


3:55pm:  Hold is confirmed.

Thursday, May 19, 2011


3:55pm: Ok, I sold out 20% at 85.50.  Holding the other 80%. 

3:50pm: It looks like we'll see a hold signal, officially.  However, we are close to a sell signal so taking a little bit of risk off the table may be wise here.   Having said that, I probably won't....  I'm trusting the hold.

12:33pm: Looks like the signal could go any way today... check back prior to the close for an update. Right now it's a toss up between hold and sell, but there are many possibilities and plenty of trading left.

Wednesday, May 18, 2011


4:45pm: A nice day for the bulls. The strong buy signal given Monday is now up 3.5% after 2 days.  Target is 10% in the 3-6 day timeframe which equates to TNA 89.72.  Let's see how it goes.  See ya tomorrow!

1:53pm: Back in my day trading days (I'm strictly a swing trader now), I used to read Bob English's Precision Report everyday.   I still usually check out his page and today he reminds us that it's common to have short term reversals mid-week of an op-ex week. This gels with my system which is sporting a hold signal today and hinting at more upside. Bob's initial target (and he is a market genius, seriously) is 1345 ES futures, which equates to about 1346.50 S&P cash index.

Tuesday, May 17, 2011


I am expecting a sizable rally to develop shortly.  For now though I'm keeping busy with other things in an attempt to forget how much I'm down. :)

Monday, May 16, 2011

Strong Buy

4:45pm: All I can say is ouch.  On the bright side, the signal flipped to a buy at some point while I was gone...not just a buy, but a strong buy. It doesn't matter to me since I'm already long, but the good news is that there is now a ~40% chance of a 10% gain in the next 3-6 days, an 81% chance of a higher close in the next 3 days, and a 95% chance of a higher close in the next 2 weeks.  This will be the 22nd time in 3 years this has happened, the last time was earlier this month and the signal gained 9%.   Unfortunately, it's going to take about 6% to get the system back to break-even.  Let's see what happens. Good evening.

3:16pm: Not a great day, but not totally unexpected either. Hopefully the rest of the week will be kinder to the bulls. Today's signal is a hold.

Saturday, May 14, 2011

Why I dislike TA...

After years of studying technical analysis, I've decided I just don't find it all that useful. Trendlines are more valuable in hindsight. Here is a current case in point:

Small caps are looking good right now!!!

Small caps are looking bad!!! :(

So my point is, you just don't know which to believe.  Another thing I read a lot about is negative divergences. The problem with those is that they can go on indefinitely so long as there is liquidity flowing into the market.  Then you have positive divergences which also look great in hindsight. But in real time, who's to say the stock is done going down? Here is SPY back in summer 2008 during a pullback before the crash later in the year

Here's a positive divergence...13/34 ema's are still positive (barely)... So, Buy!

But then the S&P went on to lose another 100 pts before it bounced.  At that point you're extremely underwater.

Why am I posting this little rant?  Well, for one I'm bored.  But I'm also justifying why I need a system to guide me. TA by itself is just too subjective.  I used to spend hours researching, chart studying, blog reading, etc. I was addicted to the market.  With my system, there is no need for any of that anymore! It's great... I can just look at my output around 3:45pm (although I usually look at it a couple times a day to update my page), place some trades at 3:59 then move on with my life for the next 24 hours. I can't tell you how much this has improved my family life! :)  Ok with that off my chest, see ya Monday.

Friday, May 13, 2011

Buy #2 confirmed

7:45pm: System is 100% long TNA averaged in at 86.12, so slightly underwater going into the weekend. The beginning of the week could be a little weak, but I'm expecting a strong finish. What do I know though?!? Not much, that's for sure. Enjoy the 2-day break.

3:45pm: 2nd buy signal confirmed.

1:23pm: Not sure what happened, but I'm finally allowed to post again. We are looking at a strong buy signal today. This will push the system 100% all in. So long as the weekend news is tranquil, I expect next week to be very green.

Thursday, May 12, 2011


3:55pm: It's close, we'll call it a hold. If something changes between 4-415, I'll update.

3:10p: Looking more and more like a "hold" signal. If we get some last hour strength, there is a slight chance we'll get a 2nd buy signal. Those are pretty much the only 2 options at this point.

11:50am: After a shaky start, our position is in the black! I'm getting another buy signal for today which would put my system 100% all in long. Check back near the close for the official signal. Based on recent action, it wouldn't surprise me if we just get a "hold" signal.

Wednesday, May 11, 2011

Buy confirmed

3:45pm: Buy signal confirmed. Initiating 50% long position at the close...

1:15pm: I'm not sure what's going on today, nor do I care. I'm getting a buy signal and will be going long if it lasts into the close.

10:24ET: Early indications are that we are getting another buy signal today. Stay tuned for any updates. I usually post the confirmed signal between 3:45-3:55 EDT. If it's too close to call at 3:55pm, I'll post the signal after the close and enter the position on the open the following day. Just a little FYI... Take it easy!

Tuesday, May 10, 2011

Sell confirmed

4:30pm: On Wed May 4, I mentioned a strong buy signal in which half of the winners gained 10% in 3-6 days. At the time I thought it was crazy to hope for 10% in a week. Here we are only on day 4 with almost a 9% gain! And judging by the strength today, the market probably isn't done going up. I won't be a part of it though due to the sell signal. It was interesting the late day strength caused us not to get a short signal. Anyway, just a third of the way through May, the system is up nearly 10% already. My fantasy target is 5% per month, which admittedly is very optimistic and probably unrealistic so anything above that is gravy. Today's gain puts the system over 25% gain for the year! The scary thing is I think this kind of performance can continue... Time will tell, but I'm excited. Have a good one!

3:30pm: We will get a sell signal today. No short signal, though. More upside is certainly possible, but the model sees too much risk on either side so heads to the sideline.

Monday, May 9, 2011

Hold confirmed.

3:55pm: Ya have to feel a bit sorry for the shorts today what with TNA up over 3% and all... Fortunately, we are on the right side of the trade this time. We get a hold signal today with the system predicting more upside to follow. Hope you've enjoyed this day as much as me. :)

12:51pm: The recent strength has squashed the short signal. Unless something drastic happens, I would expect a hold signal.

11:30am: Lots of trading left today, but so far I'm getting a short signal. So much for that multi-day rally?!? We'll see... Check back before the close for an updated signal.

Friday, May 6, 2011

Buy #2 confirmed

4:15pm: 100% long with an average price of TNA 84.63... Next week, I'm thinking we'll see a multi-day rally to test the previous highs. Have a good weekend.

3:55pm: Looks like another strong buy signal today. The system is now 100% long.

2pm: Well... now I'm seeing a buy signal. :-D I'll just stop posting until a few minutes before the close, at which time I'll hopefully know the official signal. Check back around 3:55 or so.

1:05pm: The VIX is throwing my system for a loop. I'm back on a hold signal.

12:45pm: We have entered sell territory early this afternoon. Check back later for any updates.

11:52am: Excellent day - better than I had hoped. Today's signal is a hold...

Thursday, May 5, 2011

Hold confirmed.

4pm: We were very, very close to another buy signal. I would like to see a nice gap up tomorrow to confirm, so to speak... As I mentioned a few posts ago, many of my buy signals are followed by gap ups, thus seeing one tomorrow would make me feel better about this long trade working out. It would be even better if the gap doesn't fill in the first hour. Good evening!

1:34pm: TNA is holding up well today, although the S&P is down. The system is generating a hold signal. I'm getting a little nervous here that we may continue to fall down to 1320 or even 1300 the next few days. On the other hand, being anxious is probably a good thing. They say the most uncomfortable trade is usually the correct one.

Wednesday, May 4, 2011

OK, strong buy.

4:15pm: With the rather weak finish, both the healthy and unhealthy signals were on buys. As I alluded to earlier, this is a good sign. This will be the 21st time this has happened in 3 years...16 of the previous 20 have been winners within 3 days, half of them by at least 10% 3-6 days out! Let's see how it goes this time. The system is now 50% long. If we continue to go down, the 50% cash will be nice to have if we get another buy signal. Have a good evening and I'll see ya here tomorrow.

3:40p: SPY 135.17 or lower generates a buy signal.

11:20a: Well, so much for that bounce I mentioned yesterday... that is exactly why I need a system to guide me! :) Too bad we got a cover signal. Today is a different story. I mentioned yesterday (before I deleted it) that when my healthy and unhealthy signals are both saying "go long", it has an extremely high winning rate within 3 days (80%) and half of the winners have gained 10% in the 3-6 day timeframe. That is exactly what we have again today, which is why I say we're getting a strong buy signal. Yesterday, the signals didn't last until the close, and today we see why. But, let's see what today brings. Remember, big drops usually lead to big pops!

Tuesday, May 3, 2011

Cover shorts.

4pm: Cover signal confirmed. The short position is now closed and I'm on the sideline. I expect some sort of bounce before any more downside. We'll see how it goes.

(My original post got too lengthy so I deleted it.)

Monday, May 2, 2011

4pm: Hold confirmed

3:55pm:  With a new SPY low, calculations have changed.  We'd have to finish above SPY 136.36 to get a buy signal.  I'm predicting a hold.

3:40pm: Buy signal has vanished and we are now getting a hold signal.  Keep an eye on the values below to see if SPY can get back up (or down) to buy territory before the close.  

1:20pm: As of early this afternoon, I'm getting a buy signal.  After running all the calculations, the buy signal will be confirmed if SPY closes between 136.16 to 136.75.... or if SPY closes below 135.45.   Anything else will result in a hold signal.

An update to the new strategy...

Looking at backtested data, waiting to enter a position on the following open is nowhere near as profitable.  The main reason is because a buy signal is often followed by a gap up that doesn't fill, and sell signals are often followed by gap downs.   This really cuts into total profit.  As a result, I will keep entering trades on the close.  The only exception will be when it's "too close to call".   This will happen on occasion, and I'll just post near the close that I can't determine the signal.  On those relatively rare occasions, the system will just use the opening price the following day if there is a new signal.   Given its infrequency, I don't see this affecting system profits too much.