Wednesday, April 18, 2012

Holding shorts.

The hold signal was confirmed. The system remains 100% short. SPY never had a chance to get anywhere near the buy signal. The VXX warning did not materialize as VIX closed the session in positive territory.

The market remains unhealthy, but barely... A green SPY candle tomorrow or possibly Friday will flip the system back to healthy mode. This would unfortunately stop out half the short position with another (partial) loss. I'm counting on this not happening.


If SPY closes below 138.07, the system exits the short position and opens a 100% long position in TNA. Otherwise, it is a hold signal keeping it short.

Right now I'm getting a VXX warning where VXX is up and VIX is down. This is short term bearish. But it won't be confirmed until the VIX settles at 4:15pm.


  1. Replies
    1. What exactly are you "yucking"? Do u want to go long? Are you capitulating? :)

    2. Yucking another loss...

      No, because I think the market is going to go down from here... way too much weakness, but, I swore I would follow your system as MINE HASN'T WORKED...

      thanks ;-)

  2. This mkt is wound pretty tight here, J, and there are likely a ton of stops just above today (and yesterday's) HOD... I'm crankin' down stops on my shorts I got on w/ya, here, J. If they go after those stops, we could have another triple-digit Dow day on our hands, esp since your system would also go back to "healthy". So, seems wise to reign-in risk here, being that we are so close to the flip-point. If we gap down open tomorrow, I will trail 'em down, some, too. I'm tradin' the futs, and for this time, I am having my stops run all sessions.

  3. No additional stops for me. I'm following the system.

    In my expeience, tight stops, or trailing stops, hurt the performance of most systems, especially swing trade ones. I'll take some drawdowns if it means better profits in the long run.

  4. Algyros, I hear ya, and agree with ya, and generally operate that way, too. Stops, for me, are a rare occurrence, and if used at all, are always trail stops on profitable positions (remember, I just started this short up here yesterday,and I am a big fan of scaling in/out). This just happens to be one of those times. And, for the record, my stops were hit in A/H, while I was asleep, so I am flat this short as of this morning. No harm, no loss. Next trade!

  5. Just checked my charts... wow, they had the YM futs up nearly 100 pts around 4:40am today. As J's system says, the mkts are definitely "on the edge" here. Good system! Nice to be alerted when there's heightened risk. Appreciate the updates, J.

  6. I understand your point JKH, and your strategy seems to be sound.

    But for me, the way the futures have turned down since the middle of the night is why I hesitate to use all but the widest stops.

    Of course, the day is young . . .