Monday, April 9, 2012

Unhealthy & Half Stop

3:45pm: As we flip to unhealthy mode today, the system exits half the long position on the close. The official unhealthy signal is a hold signal, which just means we'll hold the other half of the position in hopes of a bounce the next few days.

The system now goes into "short the rally" mode until or unless we flip back to healthy status...which is detailed right here.

Thanks...

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9:30am: It's official, with SPY dipping below 138.55, half of the TNA position will be exited on the close today.

To get a clue of what might happen intraday, with SPY opening below daily S3 support at 138.37, if we manage to move above that level in the first 30 minutes, it substantially decreases the chance of a trend day down. Or, alternatively, if we fill half the gap in the first 60 minutes, it also indicates a better chance of a close higher than the open. Finally, if the range of the first hour breaks, the direction in which it breaks should signal the trend for the rest of the day. Those rules of thumb come from my old daytrading notes.

22 comments:

  1. Thanks, J.

    Now that the system has switched to "unhealhthy," what would it take for the remaining 1/2 long position to flip to short?

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    1. We'll go 100% short only on the next short signal, which won't come today but could come as early as tomorrow. Usually, it takes a modest up day, or two...

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  2. wow talk about a turn around.

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  3. I wouldn't sell at all. A bounce is coming. No you might not make back the whole loss but defiantly not the right time to move out of your position. Turn around Tuesdays is coming.....

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  4. Chris,
    You may be right, of course, but I urge other people to ask themselves if they're discretionary traders or followers of a system. You're clearly a discretionary trader, and you may be an excellent one. But this site is about following a system, and I don't think that people who follow a system ever do well by taking some trades and not others. In my experience, such behavior always underperforms a system. So, again, you may be a very adept trader who can do better than J's system, but I suggest to others here that they might do far better in the long run if they get into a frame of mind where they take all the trades J offers without second guessing him or themselves. Either that or they should do like J did before he developed the system: immerse themselves in technical analysis and see if they can outperform J's (or any other) system.

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  5. Thanks, Algyros. I was about to post something similar. I think you are right, Chris that a bounce is coming. That is why it's only a half stop b/c bounces are common when my model flips modes...b/c the flips occur during pretty oversold or overbought conditions.

    Or this could be August '11 all over again. Yeah, I doubt it too, but it's possible. Regardless we could go lower before bouncing so I'll be closing half my longs. I'll be ok whatever happens... we go up, my long position benefits. We go down, we'll hopefully be able to go 100% long again at a lower price.

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    1. Some food for thought on why I a bounce is coming:

      SPY's unfilled gap down at a new low is triggering a few studies suggesting
      bullish implications.

      When employment Friday closes down there is often a rebound on Monday or Tuesday.

      The CBI has reached eight - a level beginning to suggest selling has become a
      overdone and a rebound is not far off.

      POMO indicators are still quite a bit above 0 even though QE is no longer an
      influence.

      Short-Term evidence is primarily Bullish.

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    2. Thanks to our resident quant analyst...

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  6. Too bad they didn't do the washout today (as discussed yesterday)... on the bright side, if "unhealthy" is the correct assessment, now shorting will do better than it's done YTD. Happy to see the VIX moving up.. bigger moves and bigger percent profits per trade are coming, fellas! This is where it really gets good!

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    Replies
    1. I certainly hope so, I have some serious making up to do... I have made some BAD decisions this year. Last year the market did it to me, this year I did it to myself.
      I hope next year I finally learn... :D

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  7. Quant and strategies are no match in these current markets that seem to be based on mostly news in 2012. We seem to be at a market pivot point that only will move on news. Market is going lower because of the news out of Iran. Oil prices should drift higher, hurting the market. Even my quant was wrong because of these news based situations. Buckle down as strategies are in for a rough one for 2012, as we are moving mostly on news these days. Unfortunate! Making trading almost as great as odds as the Casino. Vegas here I come!!!!

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  8. Holy Smoke. Glad I am out half, but wish I had sold it all...

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  9. Wow, this is impressive. The market is pissing on me for doubting another August-like crash could happen.

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  10. I don't know about August, but if we don't take the 50MA today, we could see 1340 very easily...

    What is your system saying so far?

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    Replies
    1. I was thinking this correction stops at 1350 before a sizable bounce. Let's see who wins. :-p

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    2. Not something I want to win...
      I just want to start making up for MY stupid decisions over the last 3 months... Bad timing, as usual

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  11. We're getting a hold signal today, that is confirmed. The possibility of a strong buy signal evaporated 10SPX points ago. Turn off the computer and find something else to do today.

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  12. S&P 500 Breaks 50DMA For First Time In 4 Months. Rumors of liquidations across funds in US and Europe will mean margin calls, forcing funds to sell the best performing assets. Things could get very ugly. Personally on the side lines for now, but I am a true follower of J's system but what is happen is to clear to wait for a sell signal.

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  13. I hope that most people here heeded my advice to follow J's system and sell half your position.

    FWIW, I trust J's methodology. Except for his and those of a few others, I find most advice out there fairly useless, except in retrospect, when it is stunningly accurate. The only other way to make money consistently in the market that I know of is to use a trend following system and stick to it.

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