The Momentum Change Indicators have again reached a confirmation point land I have re-entered the same trading positions. They are posted at the right, as of 2:45pm
It is likely that we can get a rally into the close, which can offer us better prices than currently available, but I would recommend that new positions be entered prior to 3:30pm. Or maybe not. The man who wants to get a trade, after he has made up his mind, enters a market order.
Best To Your Trading!
Bill
Tuesday, March 1, 2011
Tuesday Mid-day
I am trying to make sense of what the Momentum Change indicators are trying to tell me. The series of indicators that I have been using since late 2010 have had a very successful record of identifying change in the direction of the market with great accuracy, and with in a day or two of the actual top/bottom. The nine signals generated through late October were all profitable. The indicators in late October were a little premature, as it turns out, as the actual top did not occur until November 13. The previous Buy indicator occurred Sept,1 and the trading positions that were sold in late October were of course profitable. But the Short positions entered at the Sell signal were quickly stopped out, and I did not re-enter the short side until the Sell confirmation in November. The short positions entered were sold with the next Buy signal Dec, 1.
The Long positions entered were all profitable with the next Sell signal Jan, 19, 2011. The short positions entered were again quickly stopped out with small losses. I had a Sell confirmation Jan 28, but did not enter any short positions. With a Sell signal confirmation again on 2/22, I entered 7 short positions, 5 of which were nominally profitable and 2 were nominal losses.
The interesting thing for me is that the indicators have not generated a new Buy signal at any point since the last Buy signal on Dec. 1. In the mean time, indexes have crept higher since Jan 20, but the internal measures of market strength have continued to deteriorate, and several additional indicators (not momentum related) have flashed new warnings. It is always difficult to ignore Greed or Fear, or let it overcome a disciplined trading strategy, but a review of the results of the past 14 months are overwhelmingly profitable. The losses have been small, the profits have been great, but as always, frustration with the market can be draining.
Today is another key day for the indicators, as they are near again to a Sell confirmation. Let me be clear, I am not trying to predict market turning points, only to observe the changes that occur with sufficient alacrity to be able enter the market with a potentially profitable trade from the results from the correct observation of that new direction. Sometimes that new direction does not last long....and absent a new Buy signal, I rely on stop loss orders to protect against an error.
I am watching carefully today for another entry point, and will post around 3:30pm.
Best To Your Trading!
Bill
The Long positions entered were all profitable with the next Sell signal Jan, 19, 2011. The short positions entered were again quickly stopped out with small losses. I had a Sell confirmation Jan 28, but did not enter any short positions. With a Sell signal confirmation again on 2/22, I entered 7 short positions, 5 of which were nominally profitable and 2 were nominal losses.
The interesting thing for me is that the indicators have not generated a new Buy signal at any point since the last Buy signal on Dec. 1. In the mean time, indexes have crept higher since Jan 20, but the internal measures of market strength have continued to deteriorate, and several additional indicators (not momentum related) have flashed new warnings. It is always difficult to ignore Greed or Fear, or let it overcome a disciplined trading strategy, but a review of the results of the past 14 months are overwhelmingly profitable. The losses have been small, the profits have been great, but as always, frustration with the market can be draining.
Today is another key day for the indicators, as they are near again to a Sell confirmation. Let me be clear, I am not trying to predict market turning points, only to observe the changes that occur with sufficient alacrity to be able enter the market with a potentially profitable trade from the results from the correct observation of that new direction. Sometimes that new direction does not last long....and absent a new Buy signal, I rely on stop loss orders to protect against an error.
I am watching carefully today for another entry point, and will post around 3:30pm.
Best To Your Trading!
Bill
Tuesday Morning
After trading higher over night, the market opened modestly higher. at 10:00am, the Dow is trading up 30, or 0.24%. The SPX is trading up 2.33 or 0.18% The rest of the market is trading lower, with the Transports, the RUT, the COMP and the XLF trading lower. The Oil market has opened higher, trading at 97.61, Gold higher at 1422 and Silver at a new post-Hunt Bros high at 34.35. The commodity complex is up with the exceptation of Wheat. The Euro continues higher, trading at 1.383 and the Dollar its lackluster performance, trading off at 76.79. The 10 year Note is lower, at 3.471 as is the Bond, trading at 4.526%
News from North Africa and Middle East continues to indicate the political instability of the region is deteriorating. Libya continues to slide into civil war, while the Sauds are reported to be sending Tanks into Bahrain. There is an interesting report at The Oil Drum regarding the political impact on oil supplies and the exporting countries own pressing needs to grow their own domestic economies and the lack of adequate political resources to replace those being overthrown.
I don't think that I am the only observer who is feeling really queasy about the recent performance of the U. S. Dollar. I don't think I visit a single business site that does not have a comment to make regarding the apparent weakness of the Dollar and the strength of the Euro. It always goes something like...."the Euro is showing surprising strength as the ECB deal with the Sovereign debt problems of Ireland, Spain, Portugal and the increasing reluctance of the German tax payers to hold the Euro together" and "Fed policy will destroy the value of the Dollar". Ya... I get it.
Here is a 10 year chart of the weekly USD history.....and it shows clearly that the Dollar is breaking its trend support line.
It has flirted with this trend line in the past, but this time it is beginning to look more serious. I am old enough to remember when the reflexive response of investors the world over, when faced with obvious threatening political or economic events, would rush to abandon "Risk" investments and move to "Safe" investments. For most of my life, those investors would move to U.S. Treasuries, and Gold. When the Dow would get hit, the expected trade would be Bonds up, Gold up and the Dollar up.
But it is now apparent that something has changed. The threats presented by the violence and political instability in Northern Africa and the Middle East and the threats to dependable production of Oil certainly present the most serious challenge world stability in a long time. Yet, investors the world over seem to be focused on a "flight to safety" that includes Gold & Silver, U.S. Treasuries, soft Commodities and the Euro and the Swiss Franc. The Dollar can barely generate an uptick, let alone a rally. It is beginning to feel like something is really different and I don't think we are going to like it.
Momentum Change indicators are still firmly Bearish, with the rally yesterday having only a minimal impact on this numbers. We are back to the reality of the market internals being divergent from index direction.
As I have been typing, the market has turned decidedly weak, now trading lower with the Dow off 38 and SPX off 5.75. I may have some trade ideas this afternoon.
Best To Your Trading!
Bill
News from North Africa and Middle East continues to indicate the political instability of the region is deteriorating. Libya continues to slide into civil war, while the Sauds are reported to be sending Tanks into Bahrain. There is an interesting report at The Oil Drum regarding the political impact on oil supplies and the exporting countries own pressing needs to grow their own domestic economies and the lack of adequate political resources to replace those being overthrown.
I don't think that I am the only observer who is feeling really queasy about the recent performance of the U. S. Dollar. I don't think I visit a single business site that does not have a comment to make regarding the apparent weakness of the Dollar and the strength of the Euro. It always goes something like...."the Euro is showing surprising strength as the ECB deal with the Sovereign debt problems of Ireland, Spain, Portugal and the increasing reluctance of the German tax payers to hold the Euro together" and "Fed policy will destroy the value of the Dollar". Ya... I get it.
Here is a 10 year chart of the weekly USD history.....and it shows clearly that the Dollar is breaking its trend support line.
It has flirted with this trend line in the past, but this time it is beginning to look more serious. I am old enough to remember when the reflexive response of investors the world over, when faced with obvious threatening political or economic events, would rush to abandon "Risk" investments and move to "Safe" investments. For most of my life, those investors would move to U.S. Treasuries, and Gold. When the Dow would get hit, the expected trade would be Bonds up, Gold up and the Dollar up.
But it is now apparent that something has changed. The threats presented by the violence and political instability in Northern Africa and the Middle East and the threats to dependable production of Oil certainly present the most serious challenge world stability in a long time. Yet, investors the world over seem to be focused on a "flight to safety" that includes Gold & Silver, U.S. Treasuries, soft Commodities and the Euro and the Swiss Franc. The Dollar can barely generate an uptick, let alone a rally. It is beginning to feel like something is really different and I don't think we are going to like it.
Momentum Change indicators are still firmly Bearish, with the rally yesterday having only a minimal impact on this numbers. We are back to the reality of the market internals being divergent from index direction.
As I have been typing, the market has turned decidedly weak, now trading lower with the Dow off 38 and SPX off 5.75. I may have some trade ideas this afternoon.
Best To Your Trading!
Bill
Subscribe to:
Comments (Atom)