My game plan... (Plus Aug Trades)

3:52pm: Hold confirmed.

3:30pm: Looking like a hold signal for today. It's also another VIX down/VXX up day which always makes me leery of long positions.

12:51 pm: I bought more TZA minutes after the open. I'm up to 50% short now averaged in @ 39.58. Here is my speculative game plan, and why I'm shorting here... It could be totally wrong, but it looks good to me! Feel free to comment and/or criticize. :)





Archiving Aug Trades Below....

Date	Signal	TNA
Jul 18	Buy	78.90
Aug 1	Hold
Aug 2	Hold
Aug 3	Hold
Aug 4	Hold
Aug 5	Hold
Aug 8	Hold
Aug 9	Hold
Aug 10	Hold
Aug 11	Sell	44.15
Aug 12	Hold
Aug 15	Short	48.84
Aug 16	Hold
Aug 17	Hold - 1/2 stopped	46.20
Aug 18	Buy	38.17
Aug 19	Hold
Aug 22	Hold
Aug 23	Hold
Aug 24	Sell	42.79
Aug 25	Buy	39.78
Aug 26	Hold
Aug 29	Hold
Aug 30	Sell	49.25
Aug 31	Hold

Sell signal.

3:55pm: Sell confirmed.

3:14pm: I'm getting a sell signal this afternoon which officially closes the 50% long position. I jumped the gun this morning and closed my longs when the market popped into positive territory just before noon. Recently, I've taken things a step further and already initiated a small position in TZA. (see comments in yesterday's post) Looks like the market is going to take a breather here... Note the official signal is a sell signal, not a short signal. My short trade is purely speculative and not advised by my system.

Hold signal.

Nice day! The system will hold the 50% long position for another day (at least). The unhealthy signal is a short signal, so perhaps it may be wise to take some profits here. After such a strong move the past 2 trading days, there should be at least a little more upside if for no other reason than pure momentum.

Possible Sell Signal

3:37 pm: Sell longs if SPY closes at 117.31 or lower. Otherwise, hold 50% long position over the weekend. Right now it looks like we'll be holding as SPY has regained some legs - up to 117.60. Things could change of course...

7:11 am EDT: Yesterday was my "this is your brain on drugs" day. Not only did I screw up the SPY number, I also forgot to send a tweet. Who knew that a Benadryl & Sudafed (the real stuff, not that phenylephrine crap) concoction could alter my already fragile mental state of being that much?! :)

Anyway, we're back on track today with a partial TNA position. Although if you're on the sidelines waiting out the whole Jackson Hole drama, I can see the benefit in that. Taking a 3 day weekend here in cash sounds quite relaxing.

While we are supposedly in "healthy" market mode, I wanted to update you on where my unhealthy signals have been the past week or so and what it's saying now. I still find it hard to believe we are healthy as we've seen a 50 pt drop (last Thurs) and a ~20 pt drop (yesterday), and these things aren't supposed to happen when we're healthy.

What is interesting is that both sides have been doing well lately. And, yesterday's unhealthy signal was to cover the short position initiated on 8/23 at TNA 41.00. So both signals are pointing to some possible upside. But again, I will not take a substantial long position until we get an unhealthy buy signal. We got one back on 8/19 which would've resulted in a handsome profit. I'll be ready if it happens again. And I'll be sure to update the page with unhealthy signals (also) going forward for those of you who are like me -- skeptical we are healthy.

Buy signal if.

Buy signal (50% long) if SPY closes below 178.98

Sell signal. No short. (yet!)

Hold signal.

I'm getting a confirmed hold signal today. However, if you're convinced we are not in a healthy market (whatever would give you that idea?!?! ;) then I will also mention my unhealthy signal is "short." For what it's worth...

The official system signal is a hold.

Hold confirmed.

3:50pm: Hold signal is confirmed.

11:46am: I was getting a sell signal this morning at TNA 38+, and then a strong buy signal in the lower 35's. Right now though it's just a hold signal. A strong finish will likely result in a sell signal, while a weak finish could give us a 2nd buy.

Weekend News

I've updated the Stats section to clean it up a bit and make it more visibly consistent with other material shown on the left side of my page. I've updated all the stats as well, with the exception of the current long position that is open. The successful short signal last week helped ease some of the losses from the prior trade, but only by a handful of percentage points. I am still down over 40% this month which unfortunately negates all the good work I've done leading up to this point. The system is now down over 10% for the year. Personally I am down closer to 15%.

Had I used the stop loss rules now in place, the system would be down about 21% this month and we'd still be well in the black... sitting pretty at +19.05% for the year. Indeed, as much as I despise stop losses, clearly they can be beneficial sometimes.

Two other things I'd like to mention. While the system is down 10% this year, I see little need to panic. That kind of deficit should be fairly easy to overcome given all the recent volatility, as long as we are on the right side of the trade. TNA has moved as much as 20% in 1 day recently. Hopefully we can get back in the black in the next month or two. Lastly, I wanted to inform everyone that I got an unhealthy buy signal on Friday. This is good news for the current long position. On the other hand, if we continue to sink next week, we'll have the stop loss in place down at 1102 to protect our capital and prevent another 40% blowout.

Hold confirmed.

3:35pm: Nothing new today. A hold signal keeps the system 50% long.


11:15am: Things have changed a bit in the past 45 mins. Things are starting to point toward a strong buy signal.

10:30am: At the 1 hour mark, with TNA sitting at 39.68, I am getting a sell signal for today. I suppose that is to be expected. Here is the crazy part. My unhealthy signal is to go long! If you think that is confusing, you're right. If we are indeed in a healthy market environment again, and yesterday was nothing more than a shakeout, my system still wants to sell this. If however we are in an unhealthy market environment and there may be more downside to follow, why in the world would my unhealthy signal want to buy today? Sounds backwards to me. I guess we'll see how it works out.

Buy signal confirmed.

3:50pm: Buy signal is confirmed. I'm closing my shorts now and initiating a small-ish long position. The system is suggesting a 50% long position, and while there is a good chance we could get a bounce tomorrow, I'm not brave enough to risk that much...not after what happened a few weeks back. I'll probably stick to 25% or so. Reason being is that I'm not convinced we are in a "healthy" market for obvious reasons...and my unhealthy signal is still a "hold" which would keep the short position open. I will not go heavily long until I get a strong buy signal. (Where both healthy and unhealthy modes are showing a "buy".) Good luck!


11:05 am: Most likely we are going to see a buy signal today. It is not a strong buy signal, and there is a plenty of risk here (on both sides), but I think we may see a snap back rally tomorrow. At the very least, covering shorts today would be a wise move.

Healthy...(really?!?)

4:45pm: My way of determining market health, which of course isn't fool proof, is flagging the market as being healthy again. Despite the flip to healthy mode, a buy signal was not even close today so we got another hold signal. But with the new stop loss rules in place, half of the short position was closed leaving the system with just a 25% short position and the rest on the sidelines. The portion that was stopped out was profitable, which in my testing was quite rare.

Going forward, buy signals will be more frequent while short signals will be less so. The market will remain healthy unless support @ SPX ~1102 is breached. I am fairly confident, as are many others that 1102 will be tested at some point. That's 90 pts lower than today's close. Meanwhile, max upside potential I would guess is the 200 day MA which just happens to be 90 pts higher. Should be an interesting roller coaster the next few months. Hopefully my system can navigate it with a bit more success.

3:48pm: No signal changes. However, if SPY closes at 119.60 or higher the system flips, by my definition, to healthy mode (which I will take with a grain of salt after the waterfall decline). If that flip occurs, half of the short position will be stopped out.

So in summary:

SPY closes below 119.60, system remains 50% short.

SPY closes at 119.60 or higher, system moves to only 25% short. 75% cash.

Hold confirmed.

No changes today. Holding 50% short.

Short signal

4:10pm: The short signal was confirmed. All my longs have been closed and I'm partially short. Interestingly, if tomorrow is green we will flip back to healthy and since I'm now short, we may get to test out the new stop loss!! Fun stuff. I've updated the right side of the page to mention the new stop loss rules.

3:54pm: Short signal is confirmed with a TNA close above 48.30.

3:45pm: We are very close to a short signal. It's going back and forth. Will update when I know.

12:40pm: Just a heads up, I'm getting a solid sell signal today, much more solid than the borderline signal we had on Thursday. I'm actually going take heed of this one and dump a large majority of my longs in hopes of buying them back a bit cheaper in the next couple days. Additionally, if we hold our gains this afternoon and we finish even higher tomorrow, we will flip back to healthy mode. That's hard for me to believe given the extreme decline we just had. Unless this is a V-bottom (we just had 1 in March) I would expect a retest of 1100. I suppose it would be possible to tag the 200 day MA before the next leg down, but that feels like quite a stretch. What do you all think?

Hold

3:45pm: Hold signal keeps the system out of the market. One thing to be cautious about. VIX down, VXX up is usually a bad sign in the short term (1-3 days).

Sell signal confirmed.

We finally get a sell signal! The long position is finally closed (for a large loss) and the system moves to the sidelines. No short signal today, though.

Hold signal.

3:50p: No buy signal today, although we are close. Hold is confirmed.

11:15am: We are flirting with a strong buy signal today, which is the first buy signal I've seen since we flipped into unhealthy mode. Could be something good brewing here...

Hold confirmed. No short.

Short signal.

As one might imagine, a big up day in an unhealthy market is generating a short signal. However, the numbers going into my system are massive and extreme. It sure looks like there might be room to run to the upside for a few more days, so may want to take my signal with a grain of salt.

I don't know what will happen after the FOMC minutes are released. But if we head lower, there probably won't be a short signal. If we skyrocket into the close, the short signal will get stronger.

Hold signal & Stops...

Not much to say today. For future reference, stops will now be used as follows:

When long TNA and the system flips from healthy to unhealthy.

When short TNA and the system flips from unhealthy to healthy.

These kinds of stops could've prevented a modest loss from becoming a huge loss. Apologies to all who follow my signals/system.

Hold confirmed.

Today will be a hold signal. Let's hope for something like this Monday. :)

Monday, post flash-crash...

Hold

Can't sell now...

Hold

Hold signal confirmed.  Either today is a headfake with more downside to follow, or we're looking at a big bounce in the near future.  I favor the latter, but I'm biased by my large and underwater long position.

Hold confirmed...ouch.

Hold

Hold signal confirmed. Red Monday. Rally starts tomorrow?!?