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Apr 17: Closing Read
I am traveling today which is why there haven't been any posts and why I encourage those who have been watching over the past several weeks to sign up for the software trial and run the Delineator in real time on their computers.
The trading model is neutral having achieved its target yesterday. Signal weight started the day flat then built to strongly positive signal weight mid-day propelling price to a new high for this cycle. The value of the Primary is not currently extended at +5503, rising +236 the last bar. Next week we should see the Primary change slope again probably Tuesday.
Apr 16: Epilog
A few minor glitches on the site this evening. They told me it was an upgrade. All seems to be ok now.
The image below is marked to show EXPANSION BARS. An expansion bar is simply a range that is some multiple of the average range of a time and price bar. A bunch of them are marked with white pointers, other's aren't. I bring them up only from a terminology point of view. Obviously they're large price movements. Just remember the term for now.
Apr 16: Closing Read
At
the close, signal weight is +2124, the Change +40. The model
made its profit target once again and is now ahead of my own account
for the year for the Plus a Buck (plus a percent) model. Of
the signals that I have avoided for the reasons described in the
10:00am post, only 1 didn't make the profit target, the other 4
did and I didn't participate (the other 4 were middle signals).
And
so, sometime Friday or Monday, another down cycle will begin and
the process continues.
I
will be traveling tomorrow and will only be able to update the Journal
(assuming I can find a wireless access point somewhere) toward the
end of the day. The automated email signals will also be unavailable
tomorrow for those who do not have the software.
Apr
16: 3pm
Well,
there 'ya have it. The signal made its target (plus 80 cents)
after all even with the poor initial signal weight and the poor
Change number. Personally, since I didn't take the signal,
I do not feel as though I made a mistake. I make my
decisions consistently and in a way that makes me comfortable.
If I don't like what I see, I don't trade.
BUT
THE NUMBER ONE LESSON IS NOT TO ALLOW PRICE TO DETERMINE YOUR BEHAVIOR.
Had you purchased the initial signal and then sold at a loss
near the lows of the day during the first two hours, THAT WOULD
HAVE BEEN A MISTAKE. Why? Because at no time during
that period was signal weight so negative that a slope change down
was soon to follow. Several users I spoke with on the phone
today were quite nervous because they WERE WATCHING PRICE. IGNORE
PRICE, focus on signal weight. Patience and the direction
of the Primary are your two best defenses against losses. Patience
is built into the model which is why there is a set of signals that
must be followed---early slope change, slope change, early enter,
enter signal and know TRUST that price resolves back in the direction
of the Primary.
Apr
16: 2:53pm The Plus a Buck target of 83.73 has just
been achieved.
Apr
16: 2:20pm
Signal
weight has turned strongly positive (sorry, initially wrote negative) about an hour ago and is currently
+1571, the Change +40 as of this post.
Apr
16: 12:30pm
Signal
weight briefly moved up to +800 during this last bar as price moved
towards the highs of the day. The surprise is still on the
upside in the direction of the Primary. (This is the last
post for a couple of hours, I'm off to the gym.)
oh...the
model is long SPY at 85.93 with a GTC exit at 86.73 (even though
I have avoided this signal and the price could have easily been
improved to 85.70+- a few minutes after the signal.)
Apr
16: 12:00pm
Signal
weight has turned modestly positive at +690, the Change +15 as price
nears the highs of the day. The range today has been quite
narrow averaging 85.0-85.50, not quite large enough to trade. While
the trading model is technically long SPY at 85.93, the signal price,
I have chosen to avoid this signal due to previously explained reasons
(read today's Journal from the pre-opening to this post).
Apr
16: 11:00am
Signal
weight is now weakly negative at -215 with the Change -30. With
a normal "good" signal, this close to a signal, we'd see
the Change greater than +100 and no way the Primary could change
slope within a day. This is clearly NOT the case today as
we can actually now foresee a possible slope change down in a few
hours if signal weight remains -200 (Slope/Change=# of bars=3 bars).
Being
able to measure and gauge the strength of any signal is KEY to understanding
how to use the software. This allows us to decided whether
to trade or not. While this signal may very well work eventually,
uncertainty is always a constant and the Delineator allows us to
make decisions based upon repeatable and measurable factors. There
will always be another signal.
Apr
16: 10:30am
Signal
weight has remained very weakly positive thus far this morning.
No additional comments from the previous posts this morning
other than to continue to watch signal weight.
Apr
16: 10:00am
We
have choices. When it comes to trading, my own particular
preferences are to trade those signals where most or all of the
ingredients for a strong signal are present. As mentioned
in the previous post they are: Strong
signal weight, Strong Change number, Value of the Primary coming
from a low or high extreme. A signal is a signal and we all
know how price behaves following a slope change. As long as
signal weight remains positive, or better yet builds to strong weight,
trading the range from the lows of the day may generate some profits.
Or one can simply wait for the next signal. There's
another old Wall St. saying that applies here with apologies to
some: "you don't have to kiss ALL the girls".
Apr
16: 9:50am
Signal
weight has turned weakly positive at +296 and users of the software
will notice the Change is now -7.89!! Signals like this should
be avoided as they do not have the numbers we want to see: Strong
signal weight, Strong Change number, Value of the Primary coming
from a low or high extreme. If signal weight turns strongly
positive later in the morning we may have an opportunity, but for
now, all things being equal, this is a high risk signal.
Apr
16: 9:45am
The
problem with this signal is the weak Change at +17. Price
is attempting to fill the gap at this posting and is 85.53. Typically,
when a trading signal is generated, the Change is a very large 3-digit
number making the risks of the signal low. WE DON'T HAVE THAT
CURRENTLY. Hence, this is a higher risk signal than the average.
Apr
16: 9:33am ENTER LONG CONFIRMED AT 85.93
The
Enter Long signal has confirmed at 85.93. From an experience
point of view, one should wait about 5 minutes before entering the
trade to be sure signal weight stays positive. Buy/Sell on
open orders need to be completed before we can get a real picture
of what the morning will look like. SPY is 85.80 at this post
which is improved from the opening values.
Apr
16: Pre-Opening Comment EARLY ENTER
LONG SIGNAL
An
early enter long was issued at the close that may confirm this morning
if signal weight is greater than +300. It will take a few
minutes for enough stocks to open to generate sufficient signal
weight to generate the signal. SPY is up 65 cents pre-opening
so we can expect to see the signal confirm very soon after the opening.
Apr
15: Closing Read
Santa
Barbara got hit by very high windstorms today that knocked power
out from 1:30pm to 7:08pm. Sorry for the very late post.
Signal
weight remained weakly positive all morning and into the late afternoon.
A slope change was confirmed at 2pm, but signal weight did
not turn strong enough to trigger an early enter long until the
close. A signal cannot confirm at the close and cannot confirm
until 9:45am tomorrow. Recall that the Slope must equal +80
before an early enter long signal can be generated. During
the last bar of the day, signal weight grew from -500 to +1415 at
the close.
Apr
15: 10:30am NOTICE:
THIS IS LAST POST UNTIL AFTER THE CLOSE
Signal
weight is weakly positive at +466, the Change +70. For now
all there is to do is wait to see which way signal weight goes today.
I
have appointments that will take me away the rest of the day.
The email program is running and will send out any signals
if they are generated.
Apr
15: 10:00am
Signal
weight has turned weakly positive at +183, the Change +68. The
strong Change number is evidence of the Primary's capacity to rise
and change slope today. It's a waiting game at the current
level of signal weight, early slope change in 5.4bars.
Apr
15: Opening Read
Modestly
negative signal weight of -727 this morning has the Change a positive
number at +30. If signal weight turns positive over the next
several bars, we will get a slope change up and long signal later
in the day. OR, if signal weight turns strongly negative and
greater than -2280, the Secondary would change slope and a middle
short signal would be issued that would be a very high risk signal.
Apr
14: Closing Read
Stronger
negative signal weight continued later in the day closing at -1400.
The Change is near single digits again indicating that it will
take stronger negative signal weight tomorrow to keep it from rising.
Hence, we can expect a slope change to slowly develop tomorrow
given modestly negative signal weight, or a quick rise with
a slope change and long signal by late morning Wednesday if strong positive signal weight
is present. Extremely negative signal weight would be needed
to extend the Primary down cycle to Thursday and close the gap at
82.56.
Apr
14: 3pm
We
can now see the Change is only -2.7 while signal weight is strongly
negative. Hence, the Primary will want to rise and more and
more negative signal weight is needed to keep it down. The
Change number is so very important as it is our first key to a change
in direction of the Primary and price.
Apr
14: 2pm
For
those who have long term experience in trading, the current down
cycle is really no different that any other cycle--up or down. From
a risk/reward (Sharpe ratio) point of view, trading in the direction
of the Delineator always yields improved returns. The Delineator
doesn't limit you to trading for Plus a Buck.
From
the point of the slope change yesterday forward, shorting as price
made new highs with the goal of covering at the low range of the
day, continuously, would have generated 2 trades. Shorts would
have been laid out during the last bar of the day and covered this
morning very close to the opening. An additional short again
during the 11:00 bar would have been made with a cover during the
1pm bar. Each range had a buck in it where 50 to 60 cents
could have been achieved. The chevrons are on the chart to
identify the high and low ranges. Using the software, you
can measure the range and determine whether the range is sufficient
to trade. The larger the range, the easier making 1 percent
(for example), the smaller the range, the less opportunity. If
the range is $2, trade it for $1, take the easy trade. If
the range is too small or the Change number insufficient, wait until
the next cycle on the Primary when those characteristics are present.
There's always another cycle that will have the number relationship
we want.
More
on this later. But the point is that the Delineator is a lead
indicator and during the day price will resolve back in the direction
of the Primary, especially early in a cycle when the Change is large.
Apr
14: 1pm
Signal
weight has turned strongly negative at -1465, the Change -39 (weak)
and price has resolved back in the direction of the Primary making
new lows for the day. Patience is a virtue and probably the
most difficult skill to acquire. All of us have a tendency
to see price swings and then allow our perceptions to be affected.
With respect to how the Delinator works, ignore price and
pay attention to signal weight and where we are in the current cycle.
Apr
14: 11:30am
Price
basically filled the opening gap a few bars ago. Signal weight
remains modestly negative, the Change a weak -22. To get a
slope change today we'll need to see signal weight turn strongly
positive. If this happens it will create a truncated down
cycle. Typically, such events create higher risk signals,
but a signal is a signal and we'll just have to wait to see what
it looks like at the time.
Apr
14: 11:00am
Signal
weight is now weakly negative at -397, the Change is close to turning
positive at -12. We wait.
Apr
14: 10:30am
Signal
weight is now only moderately negative at -773, the Change -34.
Apr
14: 10:00am
Strong
negative signal weight continues but has moderated somewhat from
the opening. Notice that the Change -66 is relatively low.
This is an indication that the Primary is moving down very
slowly rather than the faster pace it normally does following a
slope change. This is why trading against the direction of
the Secondary adds risk. Price has tested the lows of yesterday
following the opening and we'll just have to wait and watch as this
down cycle plays itself out. The next anticipated signal is
an early slope change up possibly tomorrow.
Apr
14: Opening Read
With
signal weight at -1500 just after the opening, price has resolved
back to the direction of the Primary. The trading model is
neutral as we wait for the down cycle in the Primary to play itself
out. The Secondary cannot change slope down today and most
likely not tomorrow either.
Apr
13: Closing Read
The
Primary turned over today ending the up cycle that began Apr 8th.
Moderately strong signal weight developed late in the day
evidenced by the up-curl in the orange line, Change +25. If positive
signal weight is seen tomorrow, it will be possible for the Primary
to change slope again and possibly issue another long signal as
the influence of the uptrend in the Secondary is being felt in the
Primary. If a long signal is issued tomorrow, it will be a
high risk signal because of the already high value of the Primary.
Apr
13: 3pm
Signal
weight remains weakly positive at +321, the Change is +7. Thus
far today's action is almost identical to the action on the 3rd
following the slope change and exit signal. It will be several
days before there is another tradable signal.
Apr
13: 2:30pm
Signal
weight has turned very weakly positive at +97. The Primary
cannot turn back up today regardless of the level of signal weight.
The trading model is neutral.
If,
for example, signal weight were -900 and the Change were -95, one
could short the rise in price as it would be a lead balloon and
price would resolved back down in the direction of the Primary.
Apr
13: 12:30pm SLOPE CHANGE / EXIT LONG SIGNAL CONFIRMED
at SPY 85.19
The
Slope Change down / Exit Long signal has confirmed. The Primary
is now neutral. It will take very strong positive signal weight
to turn the Primary back up. If it did turn up today, it would
generate a very high risk long signal that should be avoided.
There
are two KEY factors to identifying a strong signal from a weak
signal. They are: 1) the Primary changes slope from
a large positive or negative value, 2) the Change is also a large
number greater than 100. If one waits for such conditions
to exist and take only those signals, on average 3-4 a month,
high risk trades can be avoided.
The
goal of the Delineator is to identify those periods in time when
the Primary is loaded up with energy and trades made after slope
changes and signals have very low risk. During such times,
counter trend price movements resolve back in the direction of the
Primary creating more opportunities for gain.
If
you're new to these pages, sign up for the Delineator emails through
the link above. (The next updated will be in several hours
as I'm off to the gym.)
Apr
13: 12:00pm EARLY SLOPE CHANGE / EARLY EXIT
LONG SIGNAL ISSUED
As
expected, the Early Slope Change / Early Exit long signal has been
issued. The slope change will confirm at 12:30 if signal weight
is less than -100. Since the Secondary is up, no short signal
will be issued, the Primary will be neutral (gray color).
Apr
13: 11:30am
Negative
signal weight of -2080 will turn the Primary down this bar. More
likely, the early slope change/early exit long will be triggered
at the beginning of the 12:00pm bar and confirm at 12:30. There's
a big fat gap (again) all the way down to 82.61 that's the obvious
target for being filled during the upcoming down cycle. But
the old saying, "if it's obvious, it's obviously wrong"
will play itself out as it typically does.
For
users who play the Plus a Buck strategy, all this of course is only
of passing interest. For the last several weeks, the two long
signal have been completed within a total of less than 4 hours time.
This gives those people a lot of time to do other things rather
than sit focused on their screens. But it's up to the individual
to determine their own trading styles.
Apr
13: 11:00am
Signal
weight has turned less negative at -939, the Slope is 166 and the
Change -127. An early slope change/early exit long is now
expected an hour later at 12:00 due to the decrease in negative
signal weight. Slope/Change=# of bars: 166/127=1.3 bars,
so it is also possible in the bar at 11:30am confirming at 12.
After
the slope change confirms, since the Secondary is up, no short signal
will be issued. The down cycle should last 2-3 days and behave
like the last one from Apr3-Apr8.
Apr
13: 10:40am
Apr
13: 10:00am
Signal
weight has turned more strongly negative at -1694, the Slope +386,
the Change -203. We can expect an early slope change/early
exit long at 11:00am (Slope/Change=# of bars).
Apr
13: Opening Read
Strong
negative signal weight of -1200 just after the opening has the Change
at -221. If signal weight remains negative for the next several
hours, we can expect a slope change later today (3 bars from now).
Apr
9: Closing Read
Today's
opening gap above the 83.23 level was a bonus to the trading model
which exited at 84.60 versus the 83.23 target price. It doesn't
happen this way often and sometimes happens the opposite way. Trader's
luck.
Extremely
strong signal weight persisted all day ending at +2822, price making
new highs virtually each bar all day. The great value of the
Delineator system is the repetitive nature of the cycle, and the
measurement and analysis of the motion of the Primary. It's
the same every time. Depending on your own skills and methodologies,
how you apply this knowledge is up to you. The Plus a Buck
strategy is designed as a simple to learn and understand application
of the process. The fact that it has made 14 to 15 successful
trades for the year shows how a simple strategy can sometimes be
the best, especially since most trades last only a few hours. It
depends on how much you think is enough.
Next
week we can expect the Primary to change slope late Monday to early
Tuesday, with a down cycle to last another few days after. Depending
on the level of signal weight, the Secondary should remain positive
allowing for another long signal next week. However, the negative
divergence which is now more apparent in the Secondary may bring
a short signal sooner rather than later. We shall wait to
see.
For
those who have been following these pages, you may want to consider
a trial of the software to watch the system in real time. For
new readers, sign up for the automated email signals so you can
learn how all this works. Use the links above.
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