Opening Jan 2, 2009

Primary Trend=Up

Age of current cycle=25 days

1st target level=99.50

PM Update 1/02:  The Secondary continues higher from the last long signal issued Dec 30th at 87.98.  Resistance at 92 has been exceeded thus far and the 99.50 target set in mid November may very well be reached next week.  The dark green color of the Secondary indicates that it cannot change slope within 3-4 trading days so any sideways or down action will remain a pullback in an up-cycle and not a change of trend.  (A change of trend can only occur if the Secondary changes slope.)  We should expect to see some moderation in the price action early to mid next week with a reacceleration of the trend when the Primary begins another up cycle.

AM Update 1/02:  We expect to see the Primary's uptrend cycle end today or Monday.  We are also seeing the negative divergence, that is described below, moderate substantially.  Divergence can change and often does.  It's something we put in our minds to describe the nature of the current cycle.  Seeing it moderate in the current up-cycle on the Secondary adds strength to the current trend.  We still have resistance at 92, and given the fact that the Primary is fully extended in its cycle, we would expect to see SPY not hold these levels over the next few days, but come back to challenge this level next week.

PM Update 12/31:  The Secondary is continuing to rise and approaching the 92.35 resistance level (the last set of chevron downs).  The Primary is nearly fully extended from its last long signal on the 30th at 87.98.  It will be impossible to see a slope change on the Secondary over the next 3-4 trading days.  This should allow the Primary to go through its next neutral down cycle and make another run at the highs toward the middle of next week.  88.35 should be support for SPY.  For now, the divergence that was showing previously has moderated.

AM Update 12/31:  The signal generated yesterday on the Primary already made its trade target of +$1 from the signal price so my trade on this signal is over.  Looking at the Secondary, the dark green color of the Delineator means that it is impossible for the Secondary to change slope over the next two trading days.  We will need to see if the negative divergence we have been pointing out is starting to reverse.  Recall that we said last week that the character of the next primary uptrend cycle will need to be observed to see whether SPY is capable of breaching resistance at 92 toward its 99.5 target.  The acceleration of the Secondary suggests that it may.

PM Update 12/30:  The enter long signal today at 87.98 at 11:30 made its trade price target of 88.98 in the last half hour.  The secondary continues to move higher as indicated by the darker green coloring.  Our next target for this cycle is still 99.50, but we'll have to first get through the resistance at 92.

AM Update 12/30 (2):  The primary has issued an enter long signal at 11:30 at SPY 87.98.  While we are continuing to see negative divergence, the secondary continues higher and still has a 99.50 target.

AM Update 12/30:  The secondary continues to rise.  We may see another two part rise on the Primary today.  We've seen two such patterns in the past month both of which ended with slim actual gains.

PM Update 12/29:  The primary issued its exit long signal at 12:30.  The secondary continues higher with negative divergence showing per comments below.  Until the slope actually changes, we stick to the decision model and not attempt to pre-time the Delineator with an undisciplined transaction.

Recall that the initial target of this uptrend is still 99.50 and we could very well yet achieve that goal.  I have learned over the years to trust the divergent indicator and adjust my trading portfolio accordingly.  Hence, I am virtually flat on all the small and mid cap companies I have been trading long since November 21st, when the secondary changed slope.  When we get another slope change, I'll be trading them short.  If you're an options player, you'd want to adjust your strategies to profit from an increase in volatility.

AM Update 12/29 (2):  The current uptrend in the primary is within a few hours of ending.  The nature of today's action in the primary Delineator supports the BEARISH potential for SPY to move to 75 to test the lows in late November.  The negative divergence, shown above by the arrows, is reflected in today's action on the primary.

AM Update 12/29:  The next several trading days will determine whether the current SPY uptrend continues or reverses.  As we mentioned last week, the divergent indicator is currently displaying negative divergence (orange line above) for the current cycle.  In the past, this indicator has been effective in identifying important reversal potentials toward the end of a cycle.  By watching the nature of the current uptrend in the primary, and the potential for the secondary to change slope, we will be able to determine if the market has a significant downside risk to the SPY 75 level which would represent an 11% decline.

Jan 2nd Closing Read:

The Primary continues fully extended and will begin to turn down on Monday regardless of what the price action does.  SPY has risen above 92 to the mid 93 area but will come back during the next trading day or two to retest this area.  The 99.5 level seems to be within reach for the next up cycle.

Jan 2nd 1:12pm

The Delineator is now at +11750.  The 92 resistance target is being tested.  The Delineator will end this cycle within the next day or two but end it will.  Establishing new long positions at this time is not recommended as the Delineator will decline and start another up cycle later next week.  A lower risk entry point will develop then.  As the Secondary is still firmly up and cannot turn over within the next 4 days, establishing short positions is a high risk transaction and shouldn't be held too long if taken.

Jan 2nd Opening Read:

The Primary up cycle should begin to end today.  The value of the Delineator is +10338 which is typically very near to its highest value.  Given that the Secondary cannot change slope within the next 3 days, we would expect to see another long signal toward the middle of next week.

Dec 31st Closing Read:

Well this chart says it all.  You can see the influence of the Secondary resulting in a strong move on the Primary for this particular up-cycle.  The Primary is now at +8813 and very near its upper ranges.  Viewing the slope change on the 24th to today, we have seen the Primary move from -3500 to +8850 with the value of SPY following.  This is a typical range.

We can now expect that beginning on Friday, the Delineator will begin to change slope and should then start a normal down-cycle.  As the Secondary is positive, no short signal will be issued.  If you've been reading these pages you will begin to understand that the Delineator cycle is what you are learning to understand and predict.  You will know that when it changes slope, you will see a corresponding price move.  

Dec 31st Opening Read:

The Primary continues to move higher this morning.  The Delineator value is now +2704.  The Primary cannot change slope today.  As the trade for this uptrend cycle was completed yesterday (see below), I shall be playing golf today.  I will update these pages a few hours after the close.  Happy New Year everyone!

Dec 30th Closing Read:

The signal made its +$1 target during the last bar of the day.  Per the comments below at 12:36pm, we got a typical after signal pullback followed by a move up to the highs.  While we did not get a chance to re-buy SPY after the signal in the 87.50 area, the signal did make its buck price target and the trade is now concluded.

Dec 30th:  Enter Long signal issued 11:30 @ SPY 87.98

The Primary has issued an Enter Long signal at 87.98 at 11:30.  We expect this signal will make its +$1 trading target given the fact that the Delineator's value is -1100 at the time of the signal and will rise to at least +3000 during this cycle.  Since we're already above the most recent double chevrons down at 87.33, our next targets for resistance are 88.43 then 90.35.  

12:36pm:  The darker green color shown on the Delineator means that it is impossible for the Delineator to reverse slope today.  When this condition is shown, any counter trend move back near the lows of the day can be bought and traded back near the highs.  For example, if SPY were to trade back to 87.50, it will bounce to 88.30 within a few bars.  A trade for that range would be appropriate.  The value of the Delineator is the ability to stick with your direction knowing that any counter trend move is an opportunity for more profit, not an indication that your trade is wrong.  Since the Delineator is not based on price, when price diverges from the Delineator we KNOW the price will revert back to the direction of the signal if a slope change is impossible.

Dec 30th:  Slope change confirmed, Early Enter Long signal issued

The slope change confirmed and an Early Enter Long signal was issued which may confirm at 11:30am.

Dec 30th:  Early Slope Change Up

The Primary has issued an Early Slope Change which may confirm at 11am.  If it doesn't confirm at 11 it definitely will at 11:30am.  An early enter long signal would be the next signal which should be triggered in an hour to an hour and a half.

Dec30th Opening Read:

The Primary Delineator is currently neutral.  In the past month we've had two periods where we got a dual rise on the primary (changing slope only to change again within a day).  Such patterns typically create poor signals as neither side of the cycle gets fully expanded.  We could see a slope change up generating another long signal in an hour or two.

Dec29th Closing Read:

The primary is currently neutral as the secondary slope is positive and only confirming long signals.

Dec29th: EXIT LONG CONFIRMED

The EXIT LONG signal confirmed at 12:30est.  We expect a test of the SPY 85 area shortly then a move down to 75 once the secondary has changed its slope most likely tomorrow.

Dec29th: EARLY EXIT LONG WILL CONFIRM AT 12:30EST.

An Early Exit Long signal has been issued that could confirm at noon (low probability) or 12:30 eastern time (for sure).  The exit long signal did not confirm at noon, but it absolutely will at 12:30est.  Since the secondary has not yet changed slope, no short signal will be issued.

Dec29th: Current uptrend failing. Early exit signal expected within 1.5 hours

It's not over until it's over, but this signal is fading quickly and should reverse slope within a few hours.  The secondary cannot change slope today but may be in a position tomorrow to do so and would confirm new short signals.

Opening Read Dec 29th

The current long signal is nearing failure with its +$1 target of SPY 88.24.  If this uptrend fails, a significant decline may quickly follow per comments above.

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