Friday, March 2, 2012

100% long TNA

530p: The system is now all in long. That was the last of the partial positions. Fitting that the last one helped improve our average cost more than any in recent memory. More later if I have time....

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3:47pm: Nothing has changed from the earlier post below. 137.37 or lower is a buy signal and puts the system all in long TNA. Have a great weekend, see ya Monday.

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The system is once again attempting to buy today's weakness. So long as the dip buyers don't step in yet again, we'll get a strong buy signal should SPY manage a close of 137.37 or lower. If the selling intensifies through the afternoon, we could lose the buy signal but either way I'll be back near the EOD to report the signal.

17 comments:

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    1. yw... can't believe how badly TNA is performing vs rest of market. It's due for a bounce next week I'd say.

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    2. Underperformance of smallcaps is usually a sign of coming market weakness. The chart in the link shows the ratio of IWM vs SPY. Note that periods that the ratio is above the 50 day mean correspond with strong market action. http://stockcharts.com/h-sc/ui?s=IWM:SPY&p=D&yr=2&mn=0&dy=0&id=p36770028390

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  2. Small caps are really under performing ...it almost like RUT is dissconnected from the the other major averages ...I switched to SSO. This is going to be a real close call today!

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  3. Looks like it will be a close one.

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  4. Better than SSO might be QLD. Wonder if it is against the system to use a different vehicle?

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    1. Nope but you'll see much better results using small caps. Over time anyway.

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  5. new watching this system, please give opinion of system. What amount of money is everyone trading with this system?

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  6. xtrends,

    First off, welcome to my site! You may have stumbled onto one of the most profitable (and completely free) stock trading sites on the internet. I may be a bit biased with that claim, though! :)

    I trade my entire margin account (now halfway to 6 figures) but it's my system and I have complete faith in it. I doubt anyone else here is laying their entire account on the line. Shoot, if it wasn't my system I wouldn't be...despite it's awesomeness. :)

    I always suggest taking whatever portion you're comfy with and following the system to a T.

    Once you start witnessing it winning 3 out of every 4 trades, you may be tempted to up your capital/risk (like me).

    Curious to see what others do with my signals...

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    1. Started with 5,000 since the beginning of the year. Commissions eat a bigger portion of the profits but I am comfortable with that. As my comfort level increases ( and I believe it will) I will increase it.

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  7. Thank you for the invite. Your history is impressive. i think I will paper trade a few more weeks. (plenty of time to make a fortune)After I gain some confidence I will probable start where you are.
    Congratulations on your system.

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  8. xtrends, great idea to paper trade for a while.

    The amount to trade question is very personal. Even though J has a great system here, there will be lots of ups and downs.

    I think for any trading system, you should only trade the amount you could tolerate to lose.

    Remember, we are responsible for our own trades, and it's our choice to follow this system J has generously provided. Good luck!

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  9. J, just wondering if your system has any inputs for market overbought/oversold conditions, decreasing volume, etc.

    Most chartists and Elliott Wave gurus are saying the big tumble will happen any day now. Of course, they've been saying that since November!

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    1. Yes it definitely tracks OB/OS conditions, and it goes a step further and combines OB/OS levels with the number of consecutive days spent above/below certain moving averages. I think we're at ~50 straight days above the 20 MA at this point, which is getting a bit extreme.

      I don't see a big tumble while the market is still "healthy". So I am not worried about this long position at all. If we fall below 1342, my opinion will probably change. If we're going to make a serious fall, we should start to see the big daily swings indicative of a topping process. My system is designed to nail those swings.

      As for decreasing volume...no, I only care above increased volume indicative of capitulation. Decreasing volume is all too typical during a rally and I've found it to be non-quantifiable and statistically useless.

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  10. At any given moment, someone is saying that the market will melt up or melt down. Following such advice is a great way to become insolvent. Much better to come up with a plan that appears to work (you can never know for sure) an stick to it.

    J, you asked how people trade your system. Right now, I'm trading TNA along with a number of portfolios I've set up with ETFreplay.com (for an introduction to this great resource, go to Scott's financial blog).

    When (and if) my account grows big enough, I plan on trading J's system using ES. It came as a bit of a surprise to me that using various correlation tools (I discussed them in an earlier thread) the SPY vehicles (SSO, UPRO) have a higher correlation to the TNA (and IWM) than the QQQ vehicles. However, ES controls a lot of money, so right now, it's too rich for my blood.

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    1. Nice site! Hard to believe SPY correlates better to IWM than QQQ, but numbers don't lie. Thanks for showing me the light.

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