CCI Technique: Shorting in a "Long Only" Environment

While I'm waiting for this short trade to pan out, I wanted to point out a potent shorting opportunity today that my CCI rules are dishing up. There are a couple things going on in the chart below to focus in on. In my early testing, one rule I developed was that whenever the 21MA (green line) of the CCI is above zero, the system will only go long. After looking at the data for a few days, something else caught my eye. The 2nd consecutive sell signal while in Long Mode & in Caution Mode (red line below 0) almost always resulted in a substantial sell-off in stocks. Only problem is that instances were low. To increase instances, I also included days when the red line exited Caution mode and popped up above zero. Still, I can only come up with 8 instances using SPY in the last few years. So this is just FYI and nothing to get too excited about yet....

Of those 8 trades, 7 of them were profitable within 1-9 days. Average holding time was just 4 days. Using TZA as the trading vehicle resulted in an average return of 13.96%. The 1 trade that took 9 days finally returned 5% but had a decent drawdown of about -8%. The other 6 winning trades suffered from very little or no drawdown. And there was 1 trade that didn't return a profit at all, as the market just continued to go straight up. (Hey, nothing is perfect!)

Today will be the 9th occurrence if we finish the day in an orderly fashion. Again, instances are very low but it appears a pullback here is a very good possibility.

Short confirmed.

4:05pm... The short was confirmed. Let's go bears!


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Here are the numbers:

If SPY closes @ 136.41 or higher, the system sells the long position AND opens a 100% short position in TNA (buying TZA is always an option).

If SPY closes 135.97 to 136.40: Sell longs & head to the sidelines.

Below 135.97, hold longs.

Peace!

Hold signal.

The system is expecting more upside in the short term and is not ready to bail out of this long trade yet. As I mentioned in the comments section, a similar size up-move tomorrow will likely produce a short signal. We'll see how it goes. Have a good one.

Buy #3.

It's a rare third buy signal today, although obviously it doesn't mean all that much since the system is all-in already. Should a follower of the system find themselves not 100% invested to the long side, today might be a good day to align with the system. (Keep in mind the disclaimer that I am not licensed to give any financial advice, whatsoever.)

The stop loss was not hit, so the model remains in healthy mode. Obviously this could change tomorrow, or who knows - even in the next 10 mins...

My CCI rules are producing a buy signal today. 90% chance of a profitable trade if you hold until SPY's CCI(14) indicator closes above 0.

Take care and hang in there... Better things to come.

Hold confirmed.

The long position will carry on for at least another day. Have a good one.

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.

Hold confirmed.

Hold longs.
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If we happen to close at 137.94 or higher (spy), we will have a strong short signal - our first 100% position. If we can't reach that lofty number, continue to hold the long postion.