Current market status:  Healthy
Latest signal:  Sell/Short (generated on the close of 10/8/10)
Previous signal: Buy/Long (generated 10/4/10)
System gain/loss between signals (basis SPY): +2.45%

Commentary 
The system remains on a sell/short signal from last Friday.  We were very close to getting another short signal today, but the SPX just barely outperformed the RUT by a fraction of a percent. One requirement for generating a sell/short signal in a healthy market is for TNA to outperform BGU.  Regardless, the last signal prevails and hopefully a pullback is forthcoming. 

Trying something new...

I have a new timing model I'm working on to make the trading in my personal account more systematic and mechanical.  The model first determines the health of the market, then calculates buy and sell signals accordingly.  When the market is "healthy", the model goes into "buy the dip" mode.  When unhealthy, it will short any significant strength.  Backtesting the data has shown some encouraging results.

In general, it will produce anywhere from 1 to 3 signals a week, so by all accounts, this is a short term swing trading model.  However, it appears it can also be used for longer term signals.  When the market turns healthy, go long.  When it becomes unhealthy, sell.  Those signals come much less frequently...only about 5 to 8 times a year.

One thing to note, the system will go short in a healthy market and go long during an unhealthy market. 

I will post here on a daily basis the current status of the model.   See below. 

Current market status:  Healthy
Latest signal:  Sell/Short (generated on the close of 10/8/10)
Previous signal: Long (generated 10/4/10)
System gain/loss between signals (basis SPY): +2.45%

Buy signal forthcoming...

Ok, the S&P has rallied ~100 pts and my system still hasn't fired a buy signal yet. Nice, huh?

However, it appears a buy will be coming. We just need a pullback to the 34 EMA (currently near 1100 - but rising 3 pts everyday). A successful test of that trend line will result in a buy. Nothing is guaranteed, though. In March, we never touched the line until days before the flash crash. We also got a "buy" back on July 30th which resulted in the first loss of the year for the system.

We'll see what happens this time... I suspect patience will be required before the buy is generated. 1125 on the S&P should be strong support.

Observations from the G-fund...

The TSP Trend System went into the G-fund on 8/24/10 on a day the S&P closed at 1052... some 60 points lower than where we are now.  Remaining true to the system, I poured 80% of my funds into the G, keeping 20% exposed in consideration of the positive CCI divergence and other bullish happenings at the time.  Currently (I'm writing this on 9/11), we find ourselves at pretty stiff resistance.  A declining trend line, the 200 day SMA, and the 50% retracement level from the March09 lows to April10 highs. 

Putting reality aside for the moment, here is my short and longer term forecast.   I feel we will consolidate sideways or slightly down this upcoming week to alleviate the overbought conditions, then we rally up to 1170 over the next few weeks.  1170 is my target before we tank back down to 900. Following the fall to major support at 900, I think we rally to new recovery highs within the next 12 months.  I'm guessing between 1275 and 1300.  At that point, I'm loading up on shorts, b/c I foresee a fall below 666. Of course, this is all just fun speculation.  The point of this blog is not for my ridiculous forecasts, but to post updates and signals on my short term TSP trend system.  That said, the system remains on a sell for the time being, and a buy signal won't be generated until my trend lines cross up and the S&P bounces positively off the 34 EMA.  Should my aforementioned forecast become reality and we start our trek up to 1170, I figure a buy signal would be triggered later this month.  Until then, I'm hanging out in the G fund.

If anyone else besides me is reading this, I bid you best wishes!

Trend System Sell - Tuesday or Wednesday...

The green (13MA) line is about to cross below the 34 EMA red line, indicating the trend is down again.  This is a sell signal and hints at more downside in the near future.  It has not crossed yet, but is on pace to cross Tuesday or Wednesday.  I will put another post up as soon as I'm sure they have indeed crossed.

On the bright side, we are seeing some positive divergence in the CCI indicator, posted just below the SPY here.  More times than not, that is a pretty good indication to buy. It's unfortunate the system is out of sync.  We'll see which indicator is correct, the trend lines or the CCI. 

The Tidal Wave Man was mentioning year to date performance today, so I figured I would post the stats of my trend system on here....
(Percentages are calculated using the C-fund)

 12/31/09 - 1/6/10:  +2.03%
 2/12/10 - 2/17/10:  +2.27%
 6/03/10 - 6/15/10:  +1.21%
 7/07/10 - 7/13/10:  +3.30%
 7/30/10 - 8/2?/10:  -2.98% (as of close Monday)

Total return for 2010:  +5.83% 

Not too bad.  The biggest miss was the March and April rally when the system was in the G fund.

Attached: Image of all buy/sell signals for 2010. Click to enlarge.

The bears are loose again...

The bullish scenario has been hammered the past couple days in a very unhealthy way.  Rallies should be sold or shorted.  My system is still in the market, but won't be for long as I suspect a downward cross of the the EMA lines will occur shortly. Hopefully, when that happens the market will have rallied a bit (a la May 12) so I can get out for a better price.  I see the market going to anywhere between 900 to 1030 sooner than later.   On the bright side, there are some massive gaps up above.  A major bradley turn date was 8/10 which I dismissed at the time.  Oops. 

I'm always wrong with predictions, but I'll give it a shot anyway...

TSP System update...