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Due
to the fire in Santa Barbara that affected my home, data for May6-8th
are posted after the fact on May 9th.:
May
9th:
Since
the last post on May 5th at 1:40pm, the Primary changed slope twice--down
on May 6th and back up on May 7th. It then issued a long signal
on May 8th (as shown below) that confirmed at 12:00 at 92.24. The
signal achieved its profit target (1% or .90 cents) near the close
at 92.12 (high of 93.22). Signal weight was extremely strong
at +2663.
There's
another wild fire in my area so no posts for the rest of today,
possibly tomorrow.
May
5: 1:40pm
Signal
weight remains modestly negative, the Change -41. The Slope
is -509 so each bar the Primary will fall by 500 ticks. Since
the trading model is neutral, and we'd need a slope change up prior
to any new signal, so we're basically off now for the next day or
so. Take some time off as there's no chance for a trading
signal today.
This
is the last post until well after the close.
May
5: 1pm
Over
the last two hours signal weight has stayed only moderately negative
at -963+-, the Change diminishing at -49. This slope change
looks much like the last 4 negative slope changes in that strongly
negative weight did not materialize. The trading model is
neutral waiting for the next signal. Focus on watching signal
weight and the effect on the Change.
Also
notice that when you hit ReCalc on the Stats window, the Primary
Indicator window is now blank. This tells us that there is
no level of signal weight that can turn the Primary back up today.
LEAD
BALLOON WATCH: Price has moved back to 90.40 but the signal
weight and Change numbers so far don't support the scenario...they're
a little on the weak side of negative. Signal weight is ok,
but the Change number is a bit too low.
May
5: 11am EXIT LONG / SLOPE CHANGE DOWN SIGNAL CONFIRMED
AT SPY 89.90
As
was easily predicted, the Exit Long /Slope Change down signal has
confirmed at 89.90. The Primary has now begun its down cycle
that should last 2-3 days and take the Primary from +13000 to at
least zero. There is no short signal because the direction
of the Primary is not confirmed by the slope of the Secondary, hence
the gray color of the Primary. The trading model is neutral.
LEAD
BALLOON SCENARIO WATCH: For advanced users: If price
attempts to retest the 90.40+- area, as long as signal weight is
greater than -850 and the Change is more than -60, price will resolve
back in the direction of the Primary. Just make sure there's
at least $1 range in SPY if you seek this trade. FOR NEW USERS
JUST WATCH, STICK TO THE PLUS A BUCK FOR THE NEXT 6 MONTHS.
May
5: 10:53am
With
7 minutes to go before the end of the 10:30 bar, we can quite easily
see that the exit long / slope change down signal will absolutely
confirm at 11am. Following from the previous post (IMPORTANT)
if we were still long we would get ready to exit our position when
the signal confirms at 11am. We would turn on our order entry
systems (call your broker) and get our sell order ready to go so
we can hit the SELL AT MARKET button at 11am.
May
5: 10:30am EARLY EXIT LONG / EARLY
SLOPE CHANGE DOWN SIGNAL ISSUED
As
expected from the prior post, an early exit long/ early slope change
down signal has been issued that will confirm at 11:00am if signal
weight is +360 or less. Clicking on the "ReCalc" button
first on the Stats window (always do this before attempting to read
the data) move the slider on the Primary Indicator (left column)
on the Stats window until the Xslope shows the signal weight needed
to confirm the slope change. Hence, we can see that with the
Slope -60, the Change -120, this signal has a very high degree of
confidence it will confirm.
IMPORTANT:
Let's say that yesterday's long signal did NOT reach its profit
target and we are still long SPY at 89.62. All signals
end with a slope change on the Primary. So, the early
exit long signal is our key to get ready to exit our position. The
exit signal cannot confirm until 11am but we need to be ready to
exit that trade at 11am if it confirms. REMEMBER: Trading
from enter long to exit long (or enter short to exit short) IS NOT
A STRATEGY. The EXIT signals are there as our STOPS to take
us out of a trade if our profit targets set when the position was
originated are not achieved.
May
5: 10:00am
Signal
weight has turned modestly negative at -708, the Change -132, the
Slope +65. We can easily now predict an early slope change/early
exit long signal at the next bar as the Change is now 2x the
Slope. Users should always go through this process when expecting
a slope change or exit signal.
May
5: Opening Read
Weakly
negative signal weight of -185 has the Change a whopping -127. Even
with this weak weight, because the Primary is overextended (+13673)
the slightest moderation in weight causes a strong downward pressure
on the Change. A slope change is expected today in 1.95 bars
(Slope/Change=# of bars). The trading model is neutral having
achieved its target yesterday (amazingly enough).
May
4: Closing Read Trading Model Achieves Profit
Goal.
Extremely
strong signal weight was present most of the day today. The
trading model achieved its profit target during the last half hour
of the day. With signal weight at +2675 any slight moderation
in signal weight tomorrow will pull the Change down to a strong
negative number and begin the process of the next slope change on
the Primary. Even if signal weight continues extremely strong
tomorrow, the Change number will approach zero and any further rise
in price will be unsustainable during the current cycle. This
is the pattern that is played out by the Primary time after time,
slope change after slope change. The value of the Primary
is now +13,453 and is rising by +346 ticks each bar and is in over-extended
territory.
Today's
trading signal was a high risk signal for previously described reasons.
For every high risk signal that makes its target, another
does not. It is important for users to know when a signal
is high or low risk such that they can make their own decisions
as to whether they want to take the signal or not.
May
4: 3pm
Signal
weight is maintaining its extremely positive level of +2405, the
Change now only +11. The Primary is near an extreme level
at +13,103 and is rising by +322 ticks each bar. The process
of the next slope change will be the same as any other slope change--signal
weight must moderate and when it does the Change number will turn
into a large negative value and the Primary will begin to turn over.
As of this posting, the trading model has not yet achieved
its profit target of 90.42.
As
mentioned in the Secondary section above (in the text box) the high
level of positive signal weight that was needed to achieve the 4th
target is manifesting itself in today's action. It's doubtful
that the target will be achieved on this particular cycle on the
Primary, but potentially on the next. With all this positive
signal weight, the negative weight needed to turn the Secondary
down has increased--thus allowing the Secondary to more easily hold
through a down cycle on the Primary.
PS:
I have to take off again, closing post an hour or two after
the close.
May
4: 2:20pm
Signal
weight remains extremely positive at +2400, the Change +19. Price
continues to test new highs on the day.
May
4: 12:00pm
Signal
weight continues extremely strongly positive at +2319, the Change
now +33. The trading model is long SPY at 89.62 with a GTC
limit sell at 90.42 (plus .80 cents). As soon as the Change
number gets into single digits any further gains in price will be
unsustainable in the current cycle as even higher levels of positive
signal weight will be required to keep the Primary from falling.
This is the main risk with signals generated from bent back
Primary cycles as described in the 10:45am post today and the Closing
Read on May1st.
The
next post will be at approximately 2:30 est.
May
4: 11:30am
Signal
weight continues extremely positive at +2320, the Change +40. The
trading model is long SPY at 89.62 with a GTC limit sell at 90.42
(plus a percent).
Once
the Change number falls into single digits, all the energy in the
Primary will have been spent. Any further rises in price past
that point in time will be unsustainable in the current cycle on
the Primary.
May
4: 11:00am ENTER LONG SIGNAL CONFIRMED AT SPY 89.62
The
Enter Long signal has confirmed, the model is long SPY at 89.62.
Program users would have seen on their software that the signal
was definitely going to confirm 5 minutes before 11am. They
would have prepared to take the signal precisely at 11:00 by logging
into their broker's order enter system and got ready to enter a
market buy on SPY at 11am. After being confirmed, they would
place a GTC limit sell at the signal price plus .80 cents, 90.42.
Signal
weight is extremely strong now at +2300, the Change +47. The
email system did not send out the enter long trade but users already
knew the signal would confirm and didn't need to wait for any email.
This is why having the software on your computer is essential.
These Journal pages are here to help you learn the process.
May
4: 10:45am
It
is very likely that the Enter Long signal will confirm in 15 minutes.
If it does, the model will take the trade because it's the
model. However, there are times when risks are low and times
when risks are high. Risk is a constant, but its perception
is not.
From
the Delineator point of view, when signal weight needs to be extremely
positive or negative to maintain the signal, then risk is HIGH.
We measure risk as a function of signal weight needed to maintain
the motion of the Primary. So in this case, if signal weight
simply moderated to +1500 (which is still strongly positive) the
long signal fades.
May
4: 10:30am SLOPE CHANGE CONFIRMED, EARLY ENTER LONG
SIGNAL ISSUED
The
slope change has confirmed as expected, and an Early Enter Long
signal has also been issued. For software users, your Delineator
program has no doubt locked up because of the double signal. It
does this from time to time. Simply close the program and
restart it. This is why I work so hard so that users understand
how to predict when a signal will confirm or not by using the signal
weight, Change and Slope numbers. The new version, coming
soon, will fix this small issue.
For
the Enter Long signal to confirm at 11am, signal weight of +2100+-
will be needed.
May
4: 10:00am EARLY SLOPE UP CHANGE SIGNAL ISSUED
An
Early Slope Change Up signal has been issued which will confirm
if signal weight is greater than +1520. Signal weight is very
strongly positive at +1977. The sequence of the next series
of signal is 1)confirmation of the slope change, 2) early enter
long, 3)enter long. It will be at least 1 hour before any
trading signal can be issued.
Do
not watch price YET. Focus on the motion of the Primary and
the amount of signal weight needed to keep it rising. Watching
price will only elicit an emotional response. Our goal is
not to trade every swing, our goal is to trade those points in time
when the Primary is on our side and the risks are low. Do
you think if a long signal were issued right now that the risks
would be high or low relative to most pure signals?
10:20am:
With signal weight at +2280, we can easily estimate that the
slope change will confirm since it only needs weight of greater
than +1520.
May
4: Opening Read
Strong
signal weight of +1450 has the Change +34 and the Slope -37. We
can project an early slope change up during the next bar. As
mentioned in our closing comments on Friday, if the Primary turns
up and generates a long signal today, it will be a high risk signal
but a signal nonetheless. The trading model is neutral (no
positions) indicated by the gray color of the Primary.
May
1: Closing Read
During
the last hour, signal weight turned back to being moderately positive,
the Change basically zero. If you look at the last 3 slope
changes down on your software, especially Apr 13, today's doesn't
look much different. With positive signal weight, the Change
is zero. We can expect the current downcycle to last
2-3 days with a slope change back up late Tuesday or Wednesday.
If
the Primary should turn up on Monday, it would be one of those times
when the Primary bends up on itself from an already extended position.
Further price gains are made but are not sustained, and this
sets up much larger declines. This type of behavior often
occurs at the conclusion of a cycle on the Secondary. You
can see an example of this on the Secondary from the final high
in January. There was negative divergence from late November
to December, then a breakout and failure. (Keep this in the
back of your mind for awhile.)
For
the week, a full Primary set of cycles--slope change down on the
27th, a slope change up and a successful long signal on the
29th, and another slope change down today. Each time, the
same process repeats itself because the Primary changes slope
in the same way every time. The model then sets up our long
and short trades in a repeatable way and enforces a profit taking
discipline.
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