Closing Read Aug 14, 2009

Primary Trend=Transitioning

Age of Current cycle= 3 days

PM Update Aug 14 (2):  At the close, signal weight was -1848, the Slope -72.  The Secondary is still transitioning as the Slope value has closed less than -80.  The Secondary continues to be vulnerable to multiple interday slope changes generating more risky signals on the Primary.

PM Update Aug 14:  As of 2pm, the Slope value of the Secondary was -93 and if it closes greater than -80, a new down cycle would be identified.

AM Update Aug 14:  To turn down, negative signal weight of -440 is needed.  At the open, signal weight is -869 and the Secondary has again flipped back down.

PM Update Aug13:  The Secondary picked up 37 ticks to +52, and still in a transitioning phase.

AM Update Aug13:  To turn down, signal weight of +220 is needed.  At the open, signal weight is +768.

PM Update Aug 12:  Signal weight exceeded +1600 all day, hence the Secondary's slope was positive, generating an exit short and enter long signal on the Primary.  Until the Slope exceeds +-80, the Secondary will be in a transitioning state and will be vulnerable to changing slope again.  Tomorrow, signal weight will need to be greater than +1000 to keep the Secondary up.

AM Update Aug 12:  To turn back up, positive signal weight of +1600 is needed.  A half hour after the open, signal weight is +1606 and the Secondary's slope has turned positive again at +1.7.

PM Update Aug 11:  The Secondary closed down today and is transitioning.  We cannot identify a down cycle yet until the Secondary closes at -80.  

AM Update Aug 11:  To turn down, negative signal weight of only -560 is needed.  At the open, signal weight is -1623 and the Secondary has turned down.  To signal a new down cycle, the Slope needs to be -80 at the close.

PM Update Aug 10:  The Secondary lost 62 ticks to +59  It will take less negative signal weight tomorrow to turn the Secondary over.  The clear negative divergence that is showing suggests that if in fact the Secondary begins a down cycle in the next day or so, the likely target will be 95.77, the point where the divergence began.

AM Update Aug 10:  The Secondary can turn down today if signal weight is greater than -1620.  At the open, the Secondary has lost 82 ticks to +40.

Aug 14:  Closing Read

Signal weight moderated somewhat during the last hour, closing at -1848, the Change now positive +5.  This past week we've had multiple signals that have been generated when the Secondary's slope was less than +-80, most of which have been losers with respect to the trading model (plus a buck).  Hence, with respect to the model, avoiding or trading for less can produce positive results when the Secondary can flip around a zero slope.  However, the general price direction does continue to follow the direction of the Primary, it's the duration of a signal that is really negatively affected.  The trading model is still short SPY at 100.07 with a GTC exit at 99.07.

Aug 14:  1pm

Signal weight remains extremely negative at -2205, the Change -53.  No real changes from the prior posting.  If SPY trades to 100.50+- in the next half hour, there's still an opportunity for a secondary trade back near the lows.  After that, it's probably not in the cards for today.

Aug 14:  11am  ENTER SHORT SIGNAL ISSUED AT SPY 100.07

The enter short signal has confirmed and the trading model is short SPY at 100.07 with a GTC exit at 99.07.  Signal weight is extremely negative at -2074.  Given the extended nature of the decline this morning, the potential for a "lead balloon" trade exists if SPY trades back up to 100.74+- within the next hour or as long as the Change remains greater than -60 and signal weight is strongly negative.  Such a trade would have a target of back to the lows of the day thus far. (the short signal email was not sent out)

For users trading X, do not short as only long trades should be used.

Aug 14:  10:30am  EXIT LONG SIGNAL CONFIRMED AT SPY 100.14, EARLY ENTER SHORT SIGNAL ISSUED

The exit long signal has confirmed at SPY 100.14 generating a loss of 87cents for the trading model.  An early enter short signal has also been issued that will confirm at 11am if signal weight is greater than -1070.  

Trading X for this signal generated a gain of 2.67 points (6%) from enter long to exit long.

Aug 14:  10:12am   EARLY EXIT LONG SIGNAL ISSUED

Signal weight -1863, enough to trigger an early exit long signal that will confirm at 10:30 is weight remains greater than -1840.

10:18am:  With signal weight at -1987, Change -140, Slope -8, we can expect both an exit long and an early enter short signal at 10:30am as we can estimate the Slope value to be -130+- next bar.

Aug 14:  10am

Signal weight of -1840 is needed this bar to trigger an early exit long, otherwise we'll see the signal next bar.  It was pretty obvious from the open that we'd get a slope change down and exit long this morning.  Additionally, as long as the Slope of the Secondary remains less than +-80, a pattern of both long and short signals created by the Secondary flipping around is likely.

Aug 14:  Opening Read

Negative signal weight of -647, the Change -91, Slope +173.  An early exit long signal is expected in 2 bars.  The signal has also gone out of confirmation by the Secondary as weight of -440 is needed to turn the Secondary down.  If weight remains negative, we can also expect a short signal today.

Aug 13:  Closing Read   USERS SHOULD WATCH AFTER HOURS TRADING TODAY FOR A POSSIBLE EXIT TARGET

Signal weight closed at +1255, the Change +6.  Positive signal weight tomorrow will continue the up cycle.  Negative signal weight will most likely generate an exit long signal and possibly another short signal if the slope of the Secondary turns negative depending on the weight.  X continued higher today closing at 47.32

Aug 13:  2pm

Signal weight moderated somewhat from the highs an hour or so ago, the Change not quite turning positive near the highs.

Aug 13:  12:30pm

Signal weight has turned more strongly positive per the number below.  Expect price to retest the highs from the 7th as soon as the Change turns positive and we get a further expansion in signal weight.

Aug 13:  12pm

No change in the numbers from the prior post.  

Aug 13:  11am

Signal weight has turned back positive again at +959, the Change -19 and the signal is back in confirmation as the Secondary is up once again.  X is making new highs as well for this cycle, (46.35 vs long as 44.04) for users who are using X rather than SPY for signals.

Aug 13:  10am

Signal weight has turned weakly negative at -270, the Change -87, Slope 425.  At this level of signal weight, an early exit long signal may be issued in 4.8 bars.  The Secondary has also turned back down taking the signal out of confirmation, but the signal is still active and can only be ended by a slope change down on the Primary.

Aug 13:  Opening Read

Signal weight is moderately positive at +768, the Change -45, Slope +565.  Signal weight will need to stay above +220 or else the Secondary will turn back down and take the current long signal out of confirmation.  The trading model is long SPY at 101.02 with a GTC exit at 102.02.

Aug 12:  Closing Read

Very strong positive signal weight was present all day.  The short signal from yesterday ended at 11:30 at SPY 100.96 for a loss of 70 cents.  A new long signal was triggered at 12pm at 101.02.  The trading model is long SPY at 101.02 with a GTC exit at 102.02.  With the Change only +12, and signal weight +1866, we know that signal weight will need to be extremely positive tomorrow, or any moderation in weight will turn the Change strongly negative.

 SPY CHART

For users trading X (us steel) rather than SPY, the enter long came at 44.04.  X closed at 45.04 (up 2.2%) down from the high during the day of 45.44.  Depending on your trading skills, X is a great one to trade using the Primary.  Just don't go short for previously described reasons.

 X (us steel) CHART

Aug 12:  10:15am

I have to leave for the balance of the day as I have appointments all day.  The email system is on and hopefully we won't get any double signals that will crash the program.  BTW, in about a month I will have a new program that I will update for all users, including new features and a better data feed.  If you would like to see any features, please let me know.

Aug 12:  10am

Signal weight has gained to +1606, enough to turn the Secondary back up and take the current short signal out of confirmation.  The Change is +162, Slope +262. You know the math, an early slope change up/early exit short signal is expected in 1.6 bars.

Aug 12:  Opening Read

Weak positive signal weight of +218, the Change +118, Slope -470.  At this level of signal weight, an early exit short signal will be issued in 4 bars, sooner if signal weight becomes more positive.  The trading model is short SPY at 100.26 with a GTC exit at 99.26.

Aug 11:  Closing Read

Today's strong negative signal weight turned the Secondary down just after the open, triggering a middle short signal.  The trading model is short SPY at 100.26 with a GTC exit at 99.26.  Today's low on SPY was 99.46.  Signal weight closed very strongly negative at -1861, the Change +10.8.  So we know that to continue down tomorrow, signal weight will need to be even more negative than it is at the close, else the Primary will want to rise.  

Aug 11:  1pm

No major changes from the prior posting.  I'll be away from the screens for most of the rest of the day.

Aug 11:  12pm

Signal weight continues more strongly negative at -2123, the Change -35 and the value of the Primary will cross zero during the next bar.  The trading model is short SPY at 100.26 with a GTC cover at 99.26.

Aug 11:  11am

Signal weight continues extremely negative at -1973, the Change -48.  The signal continues.  The opening gap on the 7th has been filled, the next gap on the downside is on 7/30/09 at 97.81.

Aug 11:  10:30am

Signal weight is extremely negative at -2010, the Change -60.  The trading model is short the middle signal--SPY at 100.26 with a GTC cover at 99.26.

Aug 11:  10am  ENTER SHORT SIGNAL ISSUED AT SPY 100.26

A short signal has been issued at SPY 100.26.  The trading model is short SPY at 100.26 with a GTC cover at 99.26.  This is a middle signal as the Primary had already turned down and was not confirmed at the slope change by the direction of the Secondary which turned down today.

Aug 11:  Opening Read   EARLY ENTER SHORT SIGNAL ISSUED

An early enter short signal has been issued just after the open as the Secondary has turned down.  To turn down, signal weight needs to be greater than -560 on the Secondary.

Aug10:  Closing Read

It will be possible for the Secondary to turn down on Tuesday.

Aug 10:  2:15pm    EXIT LONG SIGNAL CONFIRMED AT 100.72

The early exit long signal confirmed at 1pm at SPY 100.72.  The trading model lost 79 cents.  The trading model is now neutral.  If signal weight is greater than -1620, the Secondary will turn down and a middle short signal will be issued.

Aug 10:  12:30pm

Signal weight -412, the Change -49, Slope 5.6.  An early exit long/early slope change down signal will be issued this bar if signal weight is greater than -540, otherwise (given negative weight) the signal will come at 1pm.

NOTE:  I will be away from the screens until 2:15pm or so (gym day).

Aug 10:  12pm

Signal weight -339, the Change -53, Slope +57.  An early exit long signal is very likely during the 12:30pm bar at the current level of signal weight. Price will resolve in the direction of the Primary until there actually is a slope change down.

Aug 10: 11:15am

Signal weight continues to become less negative.  At the current level, an early exit long signal is still 3 bars away.

Aug 10:  10:50am

Signal weight has turned weakly negative at -193, the Change still large at -72.  It's important for users to focus on the level of signal weight, not price action when considering their positions.  Price is a function of behavior, and behavior is best measured as signal weight.  The current up cycle is still active and an early exit long signal is still a ways away.

Aug 10:  10am

Signal weight a bit more negative at -981, the Change -125, Slope +290.  Unless signal weight turns positive, the signal will end this morning.

Aug 10:  Opening Read

At the open, signal weight is moderately negative at -813, the Change -133, Slope +416.  An early slope change down is expected in 3 bars if signal weight remains at its current level.  The trading model is still long SPY at 101.51 with a GTC exit at 102.51.

Aug 7:  Closing Read

Signal weight closed extremely positive at +1928, the Change +6.7.  The trading model is long SPY at 101.51 with a GTC exit at 102.51.

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