Closing Jan 9, 2009

Primary Trend=Up

Age of current cycle=30 days

1st target level=99.50

PM Update: 1/09:  No long signal today as the Primary continued to decline (-5402).  Recall the Primary would need to change slope first before an early enter long signal could be triggered.  As the Secondary is still up, the next most likely signal will be a long signal.  However, one thing has changed today:  It is now possible for the Secondary to change slope interday.  This hasn't been the case over the past week and a half.

AM Update: 1/09:  A long signal is expected today on SPY.  The sequence of signals that will be generated are: 1) early slope change, 2) slope change, 3)early enter long and 4) enter long signal.  These 4 signals are repeated each time a signal is generated giving users plenty of advanced notice of a new Delineator signal.  If you had the program running on your computer, you would also see the DelinSTATS window and would be able to anticipate each of these.  Over time, users will learn to predict the motion and behavior of the Delineator setting up various trading opportunities.

PM Update: 1/08:  The Primary has changed value in two days from +13800 to -1073.  This is the down cycle that we have been expecting.  A new long signal is likely Friday mid morning.

AM Update: 1/08:  The 29th day of the current uptrend which was identified on November 21st continues.  The Secondary cannot change slope today.  The next anticipated signal will be a long signal possibly Friday or Monday.  Our 99.5 target is still active.

PM Update: 1/07:  The Secondary continued higher today as the Primary finally started its down cycle we were expecting to see on Monday.  As stated previously in these posts, the Secondary cannot turn over for several days.  We would then expect to see another long signal late on Friday or early next week.  Until the Secondary changes slope, we do not have a change in trend.

AM Update 1/07:  The Primary cannot stay up today, regardless.  It must fall and will bring SPY down with it.  The nature of the Delineator makes certain movements quite predictable especially when it is extended up or down.  We know it must change direction.  As has previously been posted below, there is enough energy for the Secondary (shown above) to remain in an uptrend while the Primary moves through its down cycle.  (NOTE: due to obligations, I will not be making comments after 10am today but will update these pages after the close.)

PM Update 1/06 (2):  The Primary has issued a Long Signal on SPY @ 93.71 (2:30pm).

PM Update 1/06 (1):  The Primary has issued a change positive at 12:30, and an early enter long at 2pm.

AM Update 1/06 (2):  As stated in yesterday's PM update, until the Primary can go through its down cycle, attempts to make new highs will be unsustainable.  While there is a possibility of a slope change and a long signal on the Primary today, from its excessively high level (+13000) a signal would generate a very high risk level compared to if the Primary were at -13,000.  A better signal will be generated later in the week as we outlined last week.

AM Update 1/06: The possibility exists for a major short squeeze which will propel SPY to the 99.50 level quickly.  This could occur prior to the Primary running through its full down cycle this week.  The Secondary continues to expand up.

PM Update 1/05:  With the Primary turning over this morning as predicted last week, the next few days will provide either a decline back to the 90 area or a time delay until at least mid week.  Either way, until the Primary can go through its down cycle, attempts to make new highs will be unsustainable.  Support will be found at 90 and 88.35.  The 99.50 target set by the Secondary on November 21st is still intact.

AM Update 1/05 (2):  The Primary issued an exit long signal, a change of slope, and is now neutral.  

AM Update 1/05:  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 this 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 this week with a reacceleration of the trend when the Primary begins another up cycle.

Jan 9th: Closing Read:

At the close, the Primary was -5760 and continuing lower.  At the time of the last slope change (1/7), the Primary was +13800.  A typical cycle ranges between -5000 <> +5000 with up to 2x that range during periods when VIX is changing rapidly.  Reading the Delineator Stats window indicates that within a day the Primary will flatten, as it did from 01/05-01/06 when it was at the other extreme.  When it's in this state, any price action to the direction of the Delineator is unsustainable and will reverse.  These opportunities, or "Set-Ups" are predictable and another application of the Delineator.  The potential for one of these SetUps may be coming up on Monday.

Jan 9th: 2:30pm

At 2:30pm the Primary has begun to flatten. Notice the orange line now has a positive slope (+11.37).  It will still be several hours at least before a slope change is possible on the Primary.  This will most likely occur Monday of next week.  The actual value now on the Primary is -5034.

Jan 9th: 11am

The Primary's value is now -2380.  There is still no evidence of any flattening in the Primary, so we simply wait.  Remember, we really don't care what value SPY is.  All we're concerned about is taking the next signal regardless of the level or the direction.

[Editor's note:  From a charting point of view, the opening gap on 01/07 needs to be filled within the next day or it will represent a break away gap.  I have always paid attention to gaps as they are an indication of the behavior--not of the price but of people.  I have found over the decades that break-away and measuring gaps are a good indication of strong trends.  I am critical of price based methodologies.  But gaps are caused by behavior typically caused by exogenous events, and as such I have found that being aware of them and what they represent to be useful.]

Jan 9th: Opening Read

The Primary is continuing lower so far this morning.  Its value is now -2031.  The set of up chevrons at 89.72-90 should provide support for SPY, but after an hours' trading SPY has traded to 89.40.  Until the Delineator begins to turn up the down cycle is still intact.  It is impossible for the Secondary to turn down today.

Jan 8th: Closing Read

The single chevron has turned into a double chevron indicating stronger support at 90.  Unless there's some exogenous event that pushes the market down, the Primary will turn up and issue a new long signal tomorrow.  The initial target on the upside if a long signal is generated will be to close the gap at 93.

2:00pm.  Support at 90 has been tested several times.  The Primary is now at -1073 from its high two days ago at +13000.  Notice the gray single chevron up at the 2nd bar this morning?  This indicates firmer than average support now at 90.  When/if it turns into a double chevron then there is very strong support at that level.  A slope change up and a new long signal is expected tomorrow...but, as always, we WAIT until it actually happens.

Closing Update:  The single chevron has turned into a double chevron indicating stronger support at 90.  Unless there's some exogonus event that pushes the market down, the Primary will turn up and issue a new long signal tomorrow.  The initial target on the upside if a long signal is generated will be to close the gap at 93.

Jan 8th: 1pm

The Primary is now +240 and declining.  There is a new chevron indicating small support at 89.64.

Jan 8th: 11am

Support at 90 has held thus far.  There is resistance at 91.20. The Primary is currently at +2300  It is possible to see the Primary begin to flatten late in the day today with a possible slope change and a new long signal on Friday.  

Jan 8th: Opening Read

The Primary is continuing its down cycle today.  Support at 90 is being tested again.  Next support is at 88.35.  The current value of the Delineator at this posting is +4607, down from +13000.  A typical cycle lasts 2-3 days.

Jan 7th: Closing Read

The Primary finally turned over today as we have been expecting.  Initial support at 92 has been tested (identified by that purple chevron up on 01/02 during the first bar).  The two chevrons at 92 on 01/05 were tested from the gap opening and gave way 5 bars later.  The Delineator value at the close is +5502, declining from +13800 at its peak.  

We can expect to see one and a half to two trading days until the Primary begins to change slope back up again.  As the Secondary cannot turn over for several more days, the uptrend identified by the Secondary is intact and the next most likely signal is a long signal Friday or Monday.

Jan 7th: Exit Long Confirmed

The Exit Long signal has confirmed at 10am.  The Primary is now neutral.  We would expect to see the Primary complete its (delayed) down cycle within the next 3 trading days.  Support for SPY is at 90, then 88.35.

Jan 7th: Opening Read: Early Exit Long

An Early Exit Long signal was generated that will confirm at 10am.

The Long signal that was generated yesterday is an example of what typically will result in a failed signal.  That is a signal coming while the Delineator is extended at an extreme positive or negative value.  The amount of energy required to keep it moving in its direction is so severe that it cannot continue.  We would expect to see the Delineator start to fall very quickly and bottom over the next 2-3 days setting up a better opportunity for another long signal early next week.  

Jan 6th: SPY LONG SIGNAL CONFIRMED @ 93.71

The Delineator has issued a SPY Long Signal at 93.71.

Jan 6th: Early Enter Long Signal

An Early Enter Long signal has been generated that may confirm at 2:30.  

Jan 6th: Slope Change confirmed

A positive slope change for the Primary has been confirmed at 12:30. The blue dots indicate that the next possible signal will be an early enter long.

Jan 6th: Early Slope Change positive

The Primary has issued an early slope change positive which may confirm at 12:30pm.

Jan 6th: 11am

The Primary is inching up slowly which one would expect when it has an extended value of +13000.  It takes more and more energy to keep it up, hence any signal from these levels will be very risky compared to a signal from -13,000 which would have very low risk as mentioned below.  Typically, new highs are unsustainable from +13000 or more and better entry points are achieved from lower Delineator levels.

Jan 6th:  Opening Read:

It appears that the Primary will not go through its typical down cycle over the next several days.  The strength in the Secondary is pulling it higher and it is possible to see a slope change up on the Primary later this morning.  If the Primary generates a long signal with the Delineator at these high levels, the risk associated with that signal will be much higher than a normal signal.

Jan 5th:  Closing Read:

The Primary is now neutral and not issuing a short signal because the slope of the Secondary is positive.  A short signal can only be issued if the slope of the Secondary is negative.  We can expect the Primary to go through a typical down cycle which should take 2-3 days and should retrace back to the SPY 90 area (the single chevron up on 01/02), strong support is at 88.35.  Accordingly,  we would expect another long signal to be generated on Wednesday or Thursday of this week.

Jan 5th:  Exit Long Signal Issued @ 92.76

The Exit Long signal has been confirmed at 11:30am at 92.76.  

Jan 5th:  Early Exit Long Signal Issued

The Delineator has issued an Early Exit Long signal which may confirm at 11:30am.

Jan 5th Opening Read:

The Primary continues fully extended and has started to turn down.  A slope change is now expected at 11:00am.

While the Primary's value is currently +13800, during the depth of the decline last year, it reached -18000.  In the last 5 years the greatest range that's been seen is -12000 to +15000.  But each time it has achieved such an extension beyond the norms (-8000<>+8000), the Delineator quickly changed direction pulling the price action along with it.

The purpose of the Delineator Journal is to introduce you to the Delineator Analytic so you may evaluate your level of interest. You are welcome to view these pages for that purpose.  The manner in which I present information does not purport to be investment advice or an advisory service.  The Journal and the "Plus a Buck" strategy are intended to introduce you to the concepts and manner of application of the software so that you may evaluate its purchase for your own use.  There are many more applications of the Delineator than are described on these pages.

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