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Apr
3: Closing Read
Signal
weight remained positive after 12pm and at the close was +1175,
the Change +22. There was never an opportunity today to trade
the Lead Balloon scenario. They do not happen very often but
it's always worthwhile to watch to see if one develops. It's
the only scenario that would prompt me to trade against the direction
of the Secondary. The trading model remains neutral awaiting
the next long signal.
Apr
3: 2:45pm
Signal
weight +1022, Change now positive.
Apr
3: 2:00pm
Signal
weight has turned moderately positive at +569, the Change now only
-7.
While
our expectations for the motion of the Primary will be a typical
down cycle over the next several days (like the previous one), the
Primary can at times flatline with several slope changes over a
period of a week. Users should review the week ending 03/20/2009
from the Archive section to see such a period (remember to scroll
UP so start at the bottom of the page). During that
week, the Primary remained in the 10500-12000 range and there were
several slope changes and no full down cycles following 2 separate
slope change down signals.
What
does this mean to us? Remember, the point of the Delinator
is to identify specific points in time when we are assured
of the continued motion of the Primary over a multiple day period.
By flatlining, it was identifying high risk periods of time;
that predictability was low despite the continued rise in price (in
the direction of the Secondary).
Apr
3: 1:30pm
If
signal weight builds to +700 or more this bar, the Change will turn
positive. No Lead Balloon today (it appears) as these scenarios
typically play out within a few bars of a slope change. The
trading model is neutral (gray color).
Apr
3: 1pm
The
numbers: still not there yet. There's an old Wall Street
saying that applies: "Never short a dull market."
Apr
3: 12:30pm
Weakly
positive signal weight of +257 is present. The Primary can
still turn back up this bar if signal weight is +2520 or more,
but it would take exogenous events to make that happen. By
next bar it will be impossible for the Primary to turn back up today.
Not all of the ingredients for a Lead Balloon scenario are
present yet. We need negative signal weight and the Change
number must be a much larger negative number.
Apr
3: 12:00pm EXIT LONG/SLOPE CHANGE DOWN CONFIRMED AT
SPY 83.35
The
up cycle on the Primary has ended with the confirmation of the exit
long/slope change down. Signal weight has become much less
negative at -257. While the Change is still a negative number,
signal weight can still turn back positive today for the next few
bars. To turn up again, signal weight of +1840 is required
this bar.
The trading model is neutral since the Secondary is
still up, hence the gray color of the Primary. The Lead Balloon
scenario described in the 11am post is not yet present.
Apr
3: 11:30am EARLY EXIT LONG / EARLY SLOPE CHANGE
SIGNAL ISSUED
An early
exit long / early slope change down signal has been issued that
will confirm at 12pm if signal weight is less than +440.
Apr
3: 11:00am
Signal
weight has turned strongly negative at -1151. With the Slope
at +43 and the Change -144, we know that an early slope change /
exit long signal will be issued in the 11:30-12:00 (next bar). To
turn over this bar, signal weight of -2020 is needed.
The
Lead Balloon scenario may unfold after the slope change is confirmed.
The conditions needed are as follows: 1)slope change confirms,
2)signal weight is -1000 or more, 3)a slope change back up today
is impossible (Slope greater than -80), 4)price attempts to rally toward the highs of the
day. When these factors all are present, any attempts by price
to rally can be shorted with cover targets at the top of the gap
from 4/1 at just above 81 or another level that you may be comfortable
with--like plus a buck from your short price.
update
10:50
Apr
3: 10:30am
Signal
weight has become modestly negative at -787. An early slope
change is expected next bar in the 11-11:30am time period unless
signal weight turns strongly positive. An obvious target for
a downside trading move would be to fill the gap to 81. Since
the Secondary is up, the trading model will NOT issue a short signal.
Apr
3: 10:00am
Weak
negative signal weight continues at -359, the Change -154. A slope
change is expected in 2.4 bars (Slope/Change=2.4).
Apr
3: Opening Read
At the
opening, signal weight is essentially zero at +56, the Change now
-154. With signal weight at zero, notice the Change is a very
large negative number. The Primary wants to decline but with
signal weight at zero we must wait until there is a more definitive
number before we can see if a Lead Balloon scenario unfolds. A
slope change is still expected on the Primary today.
Apr
2: Closing Read
We can
see by the slope of the orange line that the Change is now negative
and thus the process of a slope change has begun. It will
take more signal weight than is available to prevent the Primary
from flattening and moving lower. We can expect that any moderation
in signal weight will have a huge impact on the level of the Change,
forcing it to triple digit negative numbers very soon. Also
notice that the value of the Primary is now +10,956. From
the slope change on the 31st to today, a very typical oscillation
from a negative to positive extreme (-9650 to +10956) has been seen
on the Primary. Price during the up cycle has had a range
from 79.88 (slope change on 3/31) to 84.58 and took out the highs
from last week which was previously identified as the potential
upper range of a price move during a "normal" up cycle.
Tomorrow,
we will see the process of a slope change unfold. To experienced
traders, and not part of the Plus a Buck strategy, the period just
before and after a slope change can offer the best opportunities
to pick off a big reversal in price if the "Lead Balloon"
scenario (so named by my trader friend Jerry) presents itself.
Apr
2: 2:30pm
Signal
weight continues extremely strong at +2890, the Change is now -5.0.
Since the maximum signal weight possible is approximately
3200, one can easily see that virtually all the energy has been
spent with the Change now a negative number. While price can
continue to rise, this cycle is virtually over and the Primary will
now begin the process of a slope change down. Any further
gains in price are unsustainable and should be viewed as opportunities
to exit any remaining trading long positions. We can expect
a slope change down tomorrow. (The next posting will be about
an hour after the close.)
Apr
2: 12:30pm (this is the last post for a few hours--off
to the gym)
The
numbers:
Apr
2: 12:00pm
No major
changes from the prior post. Extremely strong signal weight
of +2853 with the Change only +16. When the Change turns negative,
any further gains in price will be unsustainable during the current
cycle.
Apr
2: 10:45am
Very
strong signal weight continues at +2638, the Change +28. The
Primary can continue to rise for the next several hours but as users know,
we're in that part of the Delineator cycle when trading risk increases.
Any moderation in signal weight will turn the Change to a
negative number initiating the beginning of a slope change. Periods
like this are ideal for taking profits on trading positions that
still remain as we know the next cycle will be a down cycle on the
Primary and we are very near the top of the current up cycle.
Apr
2: 10:00am
Signal
weight continues to rise, now at +2490, the Change +27.
Apr
2: Opening Read
Very
strong signal weight of +1835 at the opening has the Change +4.04,
and the Primary at +2526. The Change number will flatline
as long as signal weight remains above +2000 otherwise it will decline
as more and more positive signal weight is needed to keep it rising.
The trading model is flat having achieved its goal during
the first hours of the current Primary up cycle.
Apr
1: Closing Read
Strong
positive signal weight reasserted itself an hour and a half after
the opening. At the close, signal weight was +1800, the Change
only +4.47. The Primary is once again at that point where
it will take increasing signal weight to keep the Change positive
and the Primary rising. A typical cycle lasts 2-3 days, the
first day being the best day to trading in the direction of the
Primary. As mentioned in the 10:30 post, our attention should
be on the motion of the Primary, not on price action. Today's
price reversal from the opening back in the direction of the Primary
is typical in the early to mid phases of any cycle. Once the
Change number gets close to zero, as it is now, this behavior is
less reliable. Beginning tomorrow, the Primary will begin
its slope change pattern.
Apr
1: 10:30am
Signal
weight has turned modestly positive at +352 SPY has closed
the opening gap. Even while the signal weight was negative,
price resolved back in the direction of the Primary, which is the
pattern we always see during periods of time when the Primary cannot
change slope within one or two bars. Our attention is always
on the motion of the Primary, not on price action.
NOTE:
I have appointments the rest of the day. This is the
last post until several hours after the close today. The email
system is running and will issue signals in my absence.
Apr
1: 10:00am
Very
strong negative signal weight continues. A slope change on
the Primary today is the same as an Exit Long signal (which is the
signal that will be issued by the Delineator). The trading
model does not work by buying the enter long and waiting for the
exit long to be issued. It is assumed that one's profits will
have already been achieved prior to the end of the signal, otherwise
any remaining positions should be exited at the conclusion of any
signal (long or short).
Signal
weight has become a bit less negative at -1394. Unless signal
weight turns positive, a slope change down/exit long signal will
be issued in approximately 3.6 bars (492/135=3.6)
Apr
1: Opening Read
Strong
negative signal weight of -1516 is present this morning. The
Change is -166, the Slope +621. If negative signal weight
persists throughout the morning, the Primary will change slope truncating
the current up cycle on the Primary. The trading model is
neutral having achieved its target yesterday. If signal weight
is greater than -2360, the Secondary will turn down terminating
the daily uptrend and the model will begin to issue short rather
than long signals.
Mar
31: Closing Read
In summary,
today we had a classic slope change followed by a long signal that
achieved its profit target within an hour and a half of the signal.
The sequence of the data from yesterday mid-day to today's
signal is exactly the pattern that is repeated over and over again.
Understanding the motion of the Primary is what it's all about.
The periods of time just before and after a slope change offer
the best opportunities to trade. Why? Because we are
1)certain in the direction of the Primary, 2)that it cannot reverse
slope, and 3)that counter directional moves will resolve back in
the direction of the Primary.
BTW,
the large price movement during the last half hour was not accompanied
by a significant decrease in signal weight. If price had reversed
like this at 2pm, and signal weight didn't decrease, that's the
definition of a gift. You could trade that move right back
up. Since signal weight hasn't declined, then we know that
the price drop was a result of exogenous factors--which I ignore.
Mar
31: 3:00pm
Extremely
strong positive signal weight of +2674 continues. SPY is close
to filling the gap from 3/30 at 81.45. The current cycle on
the Primary should last into Thursday before starting its slope
change process again. For those of us who trade the model,
we're off for the next few days.
Mar
31: 2:00pm The Plus a Buck (80 cents) profit target
has been reached at 80.42
The
trading model just achieved its target at SPY 80.42. The trading
model is now neutral (14 successful signals of 15 this year).
Some
have asked "don't you leave a lot of money on the table trading
for just a buck?" Well, that's purely a function of your
trading skills. The Delineator is a tool and works by itself
pretty well. In the hands of an experienced investor, there
is a higher profit potential. Your success is dependent
upon your abilities.
Mar
31: 1:30pm
Signal
weight has turned strongly positive at +2216, the Change +92. The
trading model is long SPY at 79.62 with a GTC limit sell at 80.42.
The Primary should continue up for the next two days. Today's
strong signal weight will improve the Secondary's numbers making
it less likely to turn down. A retest of the recent highs
in the SPY 82 area (the average of all those down chevrons from
the 24-27th)
Mar
31: 12:30pm ENTER LONG SIGNAL CONFIRMED AT SPY
79.62
As expected,
the Enter Long signal has confirmed at 12:30pm at SPY 79.62 . For
the Plus a Buck strategy, we're still using +80 cents due to the
low number of SPY. The trading model is long at SPY 79.62
with a GTC sell limit of 80.42. Any move near the lows of
the day will be an opportunity to trade back near the highs provided
that signal weight is greater than +500. The only caveat here
is that the range of the day is low, less than 1 point.
Mar
31: 12:00 pm SLOPE CHANGE CONFIRMED, EARLY
ENTER LONG SIGNAL ISSUED
As expected,
the Slope Change up has confirmed at 12pm and an Early Enter Long
signal has been issued that will confirm at 12:30pm if signal weight
is greater than -680. With the Slope now at +207 (+80 is needed
to issue the long signal) any move lower inter-day while signal
weight is positive, will put the Primary into a Balloon Under Water
scenario wherein any move lower will resolve back to the highs of
the day. It is impossible for the Primary to turn back down
today unless exogenous events occur.
Mar
31: 11:30am EARLY SLOPE CHANGE SIGNAL ISSUED
An Early
Slope Change positive has been issued which will confirm at 12pm.
If signal weight is greater than +1960 during this bar, an
Early Enter Long signal will also be issued. Otherwise, at
noon a dual signal will be issued: Slope Change/ Early Enter
Long. As long as signal weight remains above +800 for the
next hour or two, any move back toward the middle of the range today
(79.40+-) will resolve back toward the highs. (For experienced
traders, the next several hours offer inter-day opportunities to
trade the range of the day from the long side.)
Mar
31: 11:00am
Assuming
no change in signal weight, an early slope change will be issued
at the opening of the 11:30 bar. Notice that the Slope is
-95 and the Change is +160. This means that next bar the Slope
will be +65 and possibly over +80 at the conclusion of the 11:30am
bar. An early enter long will be issued during the bar when
the Slope is greater than +80.
UPDATE
11:21AM: If signal weight is greater than +1800, a dual
signal Early Slope Change / Early Enter Long will be issued at 11:30.
(For those signed up for the emails, dual signals sometimes
crash my email program so check back here at 11:35)
Mar
31: 10:30am
Strong
positive signal weight continues at +1541, the Slope -247, the Change
+186. An early slope change up is expected during the 11-11:30
bar if signal weight maintains at the current level.
Mar
31: 10am
Strong
positive signal weight continues at +1120, the Change +193, the
Slope -442. We can expect an early slope change up in 2.3
bars given positive signal weight. (Slope/Change=# of bars)
Mar
31: Opening Read
Strong
positive signal weight of +1722 after the opening has the Change
+252 (very high). As long as signal weight remains positive,
we can expect a slope change up and an enter long signal later this
morning.
Mar
30: Closing Read
Since
the Primary changed slope down early in the day on Friday,
today's decline is consistent with the direction of the Primary.
We can never expect to predict magnitude or duration of any
move. We can determine price levels identified by the chevrons
and we know how long a typical Delineator cycle runs. But
from the perspective of the trading model, the level of price or
the amount of any move beyond our profit targets are irrelevant.
Focus on price and your discipline goes out the window. Focus
on the motion of the Delineator, trading only during those
periods in time when we can predict with certainty the motion of
the Primary, and we put a lot of risk behind us. A lot of
moves go by and so be it. Bulls and bears get fed, and pigs
get slaughtered.
At the
close the Primary is now -8253, signal weight -2954, the Change
+17. We see this relationship over and over: signal
weight will moderate, forcing the Change to a large positive number,
the Primary will begin to change slope and THEN we will have an
opportunity to find that point in time and price when low risk opportunities
present themselves. Since it is possible for the Secondary
to change slope in the morning if strong negative signal weight
is present, a middle short signal may be issued. Since the
Primary is already far along in its cycle, if a middle short is
issued, it will be a high risk signal.
Mar
30: 3:30pm
With
signal weight at -2976, the Change is +15.97. Price got close
to filling the gap mentioned previously from the 23rd.
Mar
30: 2:30pm
Excessively
strong signal weight is now present at -3006, the Change a positive
number at +7.79, the Primary -6503. It will take more and
more negative signal weight to keep the Primary from rising, hence,
any declines in price will be unsustainable during this down cycle,
creating the potential for a reversal in price when signal weight
begins to move back toward zero.
This
is not, however, a balloon under water scenario yet. That
will happen when the slope gets closer to zero and just after a
slope change up. (I am very close to programming this scenario
into the Delineator. When that is finished, there will be
two automatic trading scenarios built into the program.)
Mar
30: 12:30pm
The
Change is now in single digits. Any moderation in signal weight
will turn the Change positive. When it turns, any further
price declines will be unsustainable for the current Primary cycle.
This doesn't mean to rush out and buy SPY upon the belief
it will immediately rise, but it does provide an
expectation for the motion of the Primary. With the Slope
-898, it will take many hours of positive signal weight to turn
the Primary up.
NOTE:
Next posting at 2:30pm (off to the gym to work off some of the weekend
extremes).
Mar
30: 11:30am
Below
are the numbers for the current bar. As the trading model
is neutral, for those of us who trade the +$1 strategy, there's
really nothing for us to do, (although the action today is nonetheless
interesting.) The Delineator's signals and the +$1 strategy
are designed to identify points in time where we can make trades
with high degrees of confidence that counter trend price movements
against our positions will resolve back in the direction of the
signal. While it is certainly true that all slope changes
precede price movements, for the purposes of this Journal, not all
slope changes are trading signals. After working with the
software for sufficient time, you can develop your own strategies
and can increase your trading levels. Remember, our goal here
is not to identify every slope change, but only those that fit into
the strategy.
The
numbers: notice the signal weight is now -2908 and the Change
only -18. At some point today, the Change will turn positive
and the beginning of the next slope change will begin anew.
Mar
30: 11am
Negative
signal weight continues to grow more negative at -2856, the Change
-23. The value of the Primary is now -230 and will decline
by 866 ticks at the end of this bar. The top of the gap from
3/23 is 78.40.
Mar
30: 10:30am
The
numbers:
Mar
30: 10am
Signal
weight has grown more negative at -2627, the Change -30. The
Primary should get into negative numbers within a few hours. The
double chevron up at 79.07 may provide some support for SPY, but
that gap at 77.50 may get filled before we get a slope change on
the Primary. From the perspective of the trading model, no
action is expected today.
Mar
30: Opening Read
Very
strongly negative signal weight of -2191 at the opening has the
Primary now at +2311, the Change only -20. The trading
model is neutral because the slope of the Secondary is positive.
However, the Secondary may turn down tomorrow which would
create a middle short signal if it did.
Mar
27: Closing Read
Very
strong negative signal weight persisted most of the day. The
Change is already near zero with signal weight at -2094, so we know
the Change will turn positive with any moderation in negative signal
weight. However, with the Slope at -734, it will take at least
another day or more before the Primary can turn back up. The
Secondary should remain positively sloped for the next two trading
days making another long signal on Tuesday the next most likely
signal.
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