Thursday, June 30, 2011

Hold confirmed.

 4:05pm:  Hold confirmed. It was very close to a sell signal.

3:56pm: We are getting a hold signal. I will update post-close if anything changes (for trading on tomorrow's open), but I'm 90% sure it's a hold signal.

Wednesday, June 29, 2011

Hold confirmed.

Not sure why small caps lagged today, but we are still in good shape. 

Tuesday, June 28, 2011

Hold confirmed.

We just got back from a 2 hour "time share" presentation which was only supposed to last 1 hour.   We declined, of course, but received a $100 debit card for our troubles.  Anyway we got a hold signal today which works out nicely since I couldn't trade.  The system is running on all 8 cylinders again... TNA is up 7.25% since our last buy signal.

Monday, June 27, 2011

Healthy again...

3:58pm: Hold confirmed.

3:23pm: Looks like we are flipping back to healthy mode, which is producing a hold signal.  Just FYI, the unhealthy signal is a sell but it will be disregarded if we switch back to healthy market status.

Sunday, June 26, 2011


We are on vacation all week in Middle TN, but I'll do my best to post signals before the close each day.  I doubt I'll have much else to say besides what the system signal is. One thing I wanted to mention was that Friday was a strong buy signal.

Based on previous strong buy signals we have a:

1)  40% chance of a 10% gain in 3-6 days.
2) 80% chance of a higher close within 3 days.
3) 95% chance of a higher close within 2 weeks.

Friday, June 24, 2011

Cover and Buy

3:45pm:  Strong buy signal confirmed.  Covering shorts and going 50% long on the close.  Keeping 50% cash in reserves in case of another buy signal next week. 

10:24am: I am seeing a good chance of a buy signal today. In fact, if the market closed right now it would be a strong buy signal.  Of course, we are only 1 hour into the trading day so lots can change but just a heads up that we could be flipping signs at the close.  I really thought we'd be up today so this first hour weakness is a pleasant surprise.  (The market is illogical - don't trade based on what you think or feel.)  Good luck all.

Thursday, June 23, 2011

NEW Systems Information Page

 Recent Updates

VIX55/GDX55 for 2014: Intro
2012 Stats
100% JT Composite Strategy - Updated 12/15/12
Incorporating XIV and VXX ETF's - 9/1/12
New JTrader Composite System
CCI Stats and Profit Curves - 6/22/12
Email Notifications
100% Strategy
2011 Stats
Stop losses
Twitter feed

First off, welcome! I'm just your average swing trader who was so fed up with mediocre results that I took it upon myself to build a reliable, and easy to follow system. I run this page for the sole purpose of posting the output of a swing trading timing model I developed back in 2010. It is my goal to post the signals daily, not only on this site but also via other means such as twitter and email.

There is much more info below on my JTraderSystem timing model, but here are some things to get started. My system first determines the health of the equities market, then calculates buy and sell signals accordingly. When the market is "healthy", the model is programmed to buy dips and ride uptrends. When "unhealthy", it will sell and/or short rallies.

The system produces 1 of 5 signals everyday. Those 5 signals are Buy, Sell, Hold, Short, and Cover. On average, it will flip positions once or twice a week...from long to short or vice versa. Signals are generated on the close at 4pm. Usually I can predict what the signal will be before the close and try to post that info here and on twitter around 3:45pm. When I can't trade at 4pm, I will enter the position on the open the following day, or in after-hours or pre-market trading. The "healthy" or "unhealthy" signals are longer term indicators and could theoretically be used for TSP/401k accounts where transactions may be limited. One other thing to note, the system will go short in a healthy market and go long during an unhealthy market.

While my model is based mostly on $SPX, I exclusively trade TNA (or TZA if shares are unavailable for shorting) for a couple reasons. First, small caps will usually maximize gains for any market move. More importantly, the system has been optimized using small caps as a trading vehicle. If one prefers to avoid 3x leverage, IWM/RWM make great alternatives. All references to performance (monthly, daily, etc) are based on the closing share price of TNA and do not account for fees, slippage, taxes, etc.

This blog is available to the entire world. If anyone happens to stumble across my page and decides to follow these signals, I caution you to trade at your own risk. Money management is paramount. Don't go "all-in" short just because my model generated a short signal. I am not a professional trader, nor do I have any authority to offer any financial advice. Swing trading is just my hobby. I developed this system to make my trading more mechanical and systematic. Now that that's out of the way, here is a bit more info on my system.

For much of 2010, I tried my hand at daytrading and lost much more than I won. I never really had sufficient time to do it, between kids and work, so when I did have the time, I was wildly unsuccessful. That's probably not why I was unsuccessful though. I made all the mistakes such as trading with emotion and not following my own rules. I also found myself addicted to research and chart studying night after night. Something needed to change. I needed something simple and easy to follow. And I needed something that required very little of my time, or my wife was going to divorce me! Not really, but almost. I realized I had to eventually quit daytrading and get more into swing trading. I set out to develop a system which would tell me what to do and when to do it. Starting summer of 2010, I began developing a system which satisfied those requirements - to look at a spreadsheet a few minutes before the close and have it tell me what to do. I came up with JTraderSystem in late summer 2010. At first, it was a simple system which utilized candlestick math (which I'll get into) and a couple intra-market relationships...such as SPX vs RUT vs VIX. For example, VIX up, SPX down, RUT down more than SPX = Buy. Of course, it's not that simple which is why I needed candlestick math....and some other things that I hadn't thought of yet.

Before I get to those things, here is a quick glimpse at my candlestick math, which is exactly what it implies.
That was all well and good, but backtested results were mediocre. I needed something to establish what kind of market we were in. In September, it dawned on me one day that I needed to establish healthy and unhealthy market rules. Several years back, I had read an article "How to spot market reversals" and I wanted to incorporate those concepts into my system. I suppose I could've just simply used moving averages like the 20, 50, 200, but this was more sophisticated and I liked it. JTraderSystem2 was born, and I started using it a little for my trading. Not exclusively b/c I still thought I could succeed at day trading. Yeah, right.

The system did quite well in September as you can see on the left. And it had a stellar October (!) which is when I started this page so I could show it off to the world. November and December were blah, so I added one more piece to the puzzle in the winter - Bullish/Bearish Sentiment. I wanted it to be hard to generate a short signal when everyone (the dumb money) was bearish and I wanted buy signals hard to come by when everyone was euphoric. So I incorporated sentiment into the system and with lots of backtesting I introduced "cover" and "sell" signals in Jan 2011. JTraderSystem3 was born.

A few months back, I altered the way the system flipped back to healthy. Prior to the change, it was way too slow and we were stuck in short positions when the market was skyrocketing upward off of bottoms. Here is the new way I determine market health/unhealth. Click to enlarge.

So, that change along with some spreadsheet modifications to make it much nicer on the eyes resulted in the current JTraderSystem4, which I have running on my laptop every Monday through Friday from about noon until 415pm. It is an excel spreadsheet (actually OpenOffice) which ingests live market data every 60 seconds, including SPY, SPX, VIX, TNA, BGU, IWM, and VXX. All the candlestick math is done on the fly. I have different code to generate signals based on whether we are healthy or unhealthy. I can see both signals, so when both modes are showing "buy" or "sell", I label those signals as being strong. Not that I throw more money into those trades. It just gives me a bit more confidence.

It could be completely automated, except for the fact the VIX will still change values between 4 and 4:15pm. There have been a few times when the VIX changed a lot in that time and changed my signals. That really is the only "gotcha" that I have seen. When that happens, I'll take action on the following open to get back into line with my system.

Speaking of automation...

Update: 5.7.12 I just added a 2nd system that I developed earlier this year (2012), simply called the CCI System. It solely uses SPY and it's associated Commodity Channel Index (CCI) to generate signals. Nothing else is involved, at all. It's a very simple and effective system and I look forward to trading it and tracking it here. If one was so inclined, it could easily be automated due to its simplicity. I'm still in the dark ages when it comes to automated trading platforms, so I make all my trades manually.

Update: June 2012
I combined the two systems described above into 1 catch-all system called the JT Composite. It's fairly simple. If the JTraderSystem (JTS) is long and the CCI system is long, the JT Composite will be 100% long. If both are short, the Composite will be 100% short. If 1 system is in cash and another is either long or short, the JT Composite will take a 50% long/short position while keeping the other 50% in cash. This is my main model now and I do my best to follow it exclusively. I dedicate all of my capital towards it, so during draw-downs you may notice my mood a bit more sour than usual! lol

Update 9/1/12: I have incorporated XIV and VXX into my trading during times of contango and backwardation, respectively. See the link at the top for more info.

Please check out all the links above. They may answer some of your questions. Otherwise, feel free to ask questions in the comments section. Or better yet, email me at jtrader21 "at" Thanks!!

Hold confirmed.

4pm: The hold signal was confirmed.  The system remains 50% short.  Greece news @ 3pm almost provided the "mini-miracle" needed for a buy signal but ultimately came up just short. 

1:17pm:  If SPY finishes red, we will have a hold signal.  If it can somehow manage to finish higher than yesterday's close, which would take a mini-miracle, we would get a buy signal.   I see no other alternatives so I will likely not be updating prior to the close.  I will however have that post detailing my system hopefully in the next couple hours.  Take care.

Wednesday, June 22, 2011


3:50pm:  Hold confirmed.  Still unhealthy and still holding shorts...  So far, so good.  Should be more downside to follow.

1:45pm: As I alluded to yesterday, a green SPY finish will flip the system back to healthy status.  Interestingly though, we could still get a short signal today despite the flip.  Indeed, we could get a relatively rare healthy short signal which would put the system all in short - 100%.   For this to happen, the high of the day (SPX 1298.61) would have to remain unchanged, and SPY would have to finish at 129.68 or higher.   If the high of the day is exceeded, the required SPY value would change. With FOMC minutes expected after 2pm things could change quickly. So as usual look for a late day update.

Also, be on the lookout tomorrow (Thurs) for a post on the inner workings of my system, as requested.  I won't get too much into the details, but at least you'll understand what the heck is going on.

Tuesday, June 21, 2011

Short confirmed

3:50pm ET:  Short signal confirmed.  It is a strong short signal as long as SPY remains below 129.63 today.  A close above 129.63 makes it a relatively weaker signal, but a 50% short signal nonetheless. 

As I mentioned before, a green SPY close tomorrow (incidentally, an FOMC day which is seasonally bullish) puts the short signal in doubt as the system will flip back to healthy status. Good evening.

 10:32am ET:
It's quite apparent today that yesterday's sell signal was a bummer, but on the bright side we are not short.  That will change today - most likely.  I am getting a short signal this morning which will probably remain valid into the close.  Since today appears to be a true trend day, I would expect the day to slowly melt up (with a few small dips here and there to take out some stops) finishing near the high of the day.  Thus, it would be unwise to try to short this action until ~4pm.

Another important thing to note is that if SPY finishes green today and tomorrow, the market status will flip back to healthy. It will then remain healthy until either the 6/16 low of 1258 is breached or until we make a sustained run to the upside and undergo another topping process.  I will detail my healthy and unhealthy indicators in a post sometime this week.

Monday, June 20, 2011

Sell signal confirmed.

3:45pm: Looks like the short signal is gone, guys.  A sell signal is on tap for today.  The system moves to the sidelines on the close. Again, no short signal today.

As of 12:45pm, we are getting a short signal.  If today's strength persists into the close, the short signal will be confirmed.

Friday, June 17, 2011


I'm outta here, but it looks like another hold signal.  90% confident.  If it turns out to be something else, I'll update it either late tonight or tomorrow.  Have a good weekend.

Thursday, June 16, 2011

Hold Confirmed

4pm: It was close, but SPY couldn't quite get above the critical limit.  Resulting signal is a hold of the 50% long position. 

3:38pm: Whoa, nice reversal/bounce off the 200 day MA.   I take back the hold confirmed call from earlier.  Slight chance of Buy #2 again.  To get it, we need a SPY finish over 127.35 to generate a 2nd buy signal.

3:03pm: Hold signal confirmed.

2:12pm: It's going to be close today.  Most likely it will just be a hold signal, but there is a small chance of a 2nd buy signal.  I will update when it becomes clear.

Wednesday, June 15, 2011

Buy Signal

The system won't be on the sidelines very long.  It's taking another 50% long position on the close today.

Tuesday, June 14, 2011

Sell confirmed.

Today will be a sell signal.  Because of the fact I'm still underwater, I might not follow my system to the sidelines.  I think there will be more upside, so I may hold onto my 50% long position for another day or two.  It all depends on how I'm feeling at 4pm.  One thing that should be mentioned is that b/c today is a trend day, there is a good chance we'll close near the high of the day. Anyone wanting to sell their longs should probably wait until the close for the best price.

Monday, June 13, 2011

Hold confirmed.

3:47pm ET: Hold confirmed. 

2:40pm: 90% chance of a hold signal today... should see a sizable bounce the next few days. (although I've been saying that since last week)

Friday, June 10, 2011

Hold confirmed.

We are very close to Buy #2 today, but it's not going to happen. Signal is a hold. I'm still sitting in about 50% cash and I'm anxious to put my money to work. I am expecting a good bounce next week into opex.  This last hour will be pretty important.  If we continue to melt up, it will make for a relatively bullish candlestick on the daily chart.  Otherwise it's another big red candle perhaps indicating more downside early next week.  That's it for now. Have a good weekend.

Thursday, June 9, 2011

Hold confirmed.

Looks like a hold signal today.  Will update later, but I doubt we'll see any changes... Have a good one!

Wednesday, June 8, 2011

Hold Confirmed

3:57pm:  Hold confirmed.

I'm getting a 2nd buy signal which would push the system all in.  I'm just a little leery b/c I think the ultimate target of this down move is going to be sub 1250 which would take out a TON of stops.  I would expect a sharp move upward to follow if that happens. Will update later.

Tuesday, June 7, 2011

Hold confirmed.

3:55pm: Hold confirmed.

2:40pm: We will probably get a sell signal today. (Edit: There is a slight chance of a hold signal...check back later) No short signal, though.  This could mean there is more upside, and if someone doesn't mind a little risk they could hold their longs and try to get some more of their money back.   If we get a sell, I would not advise this.  I follow the system with no exceptions.

Monday, June 6, 2011

Market turns Unhealthy

3:20pm:  Unlike 2 hours ago, the Nasdaq and VIX are now confirming the unhealthy market status. I would expect a small 1 or 2 day bounce before the next wave of selling. That is just a guess though.  Today's confirmed signal is a hold.

1:02pm: With the SPX dipping below 1294.70 this morning, the system officially flips to unhealthy mode. This essentially loosens the requirement for sell/short signals and makes buy signals far more scarce.  However, something strange is going on.  The flip to unhealthy status is not being confirmed by the VIX right now.  This could change if the VIX closes up on the day.  I can't recall the last time such a large dip in the indices coincided with such an uninspiring move in the VIX.  Additionally, the Nasdaq is not supporting the unhealthy flip either.

At any rate, it looks like we'll get a hold signal today. I fully expect the system to sell the next bounce.  If the next bounce is exceptionally strong, it will flip the status quickly back to healthy.  If not, we might expect more downside.

I will update later today with the official signal.

Sunday, June 5, 2011

Bounce this week?

As stated Friday, a strong buy signal was a near miss. For some weekend market fun, let's look at the updated stats for strong buy signals. Stats are for TNA (as always).

Next Day:
Avg Gain: 2.17%
Win Rate: 63%

2 days later:
Avg Gain: 4.58%
Win Rate: 71%
Most losers were big though...

3 days later:
Avg Gain: 6.38%
Win Rate: 71%
Some big losers!

4 days later:
Avg Gain: 8.72%
Win Rate: 75%

So statistics show we should get a nice bounce this week. Notice I said some of the losers were big. By day 3, there was 1 loss that exceeded 10%, most of the others were right around 5% down. So a pop is not guaranteed this week, but when you see a 3 out of 4 chance of a higher close by Thursday with an average gain of nearly 9%, that's a pretty strong bias.

I'm a huge fan of Rob Hanna @ Quantifiable Edges. One thing he offers is a nightly newsletter (w/ free 1 week trial!). Each night he runs a bunch of tested strategies and combines them into an "Aggregated" system. Based on the results of all his studies, he can predict where the SPX might go if all studies average out. Going into Friday, most of his studies were bullish and pointing to an SPX value of 1353. We closed at 1300 and historically when we've closed this far below his aggregated predicted value, a big pop was just around the corner. Sure, there may be a little bit more pain to endure on the long side, but I believe upside potential outweighs the downside risk and I'm very bullish this week.

One thing to watch out for is a possible flip to "unhealthy" status. We flirted with it last Friday (see previous post). I'm hoping for a gap and go Monday to squeeze the shorts, but if we don't get it, the model will flip into "sell the rally" mode and it won't take much to get sell and short signals. On the flip side, buy signals in an unhealthy market have a high win rate and are usually extremely positive. So, we'll see what happens this week. Enjoy the rest of the weekend.

PS - One last piece of bullish evidence. Trouble if we break below, but so far so good.

Friday, June 3, 2011

Hold signal.

4:21pm: Very, very close to a buy signal. Actually, not just a buy signal but a strong one. I've shown stats on strong buy signals before, but I will update the stats this weekend. Had TNA finished .07 points lower at 76.79, a strong buy would've been generated. So while it doesn't quite qualify, it was close enough to review what has happened in the past following strong buys.

The system remains 50% long, and believe it or not is still healthy.

However, a dip below SPX 1294.70 or below 2706.50 on the Nasdaq would flip the market to "unhealthy" and I'd have to reconsider some things.

11:16am: Hold signal confirmed today. I expect a STRONG bounce next week. I'm not just saying that - I will show my reasoning over the weekend. Off to go boating w/ friends for the rest of the day. Happy Friday all.

Thursday, June 2, 2011

Hold confirmed.

3:58pm: Hold confirmed.

2:30pm ET: Today is looking more and more like a hold signal.

Wednesday, June 1, 2011

Buyable Dip!

4:15pm: Wow, what a great day! Looking forward, there may be another day or two of selling. It wouldn't surprise me. But we'd probably get another buy signal to put the system all in for the eventual bounce. Or we may bounce from here. Who knows... All I know is I like to see my account gain over 4% in 1 day! :)

3:25pm: My system is not fooled, this dip is buyable and comes with very good chances it will be profitable! :) Buy signal is confirmed. Closing short position and initiating 50% long position on close.

11:06am: It's another good day for the system. I was a bit bummed by the gap down, but stuck to the plan and had my orders placed to execute on the open. With TZA up over 3% already, it looks like the first trade in June is going to be a winner. And it also looks like it might be a brief one. I'm getting a buy signal at the current time. We'll see if it holds into the close.