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Feb
20: Closing Read
SPY
came within 3 cents of making its +$1 target during the 3:30 bar.
At that point, signal weight was -2980 yet the Change was
barely negative at -1.78, a key that a bounce was coming. At
the close, notice that signal weight is strongly negative at -2053
and the Change is now positive at +14. Once again, the Primary
wants to rise and it will take ever increasingly negative signal weight
to keep it down on Monday. Any further decline in SPY from
these levels are unsustainable.
Feb
20: 12:35 A Note to New Readers:
Typically,
signals on the Primary come when the value of the Primary is extended
at either a positive or negative extreme. During the period
following a slope change and an enter signal, it is impossible for
the Primary to change slope against the signal for at least a day,
typically two. During these periods, counter signal price
moves are viewed as opportunities to create a secondary position
back in the direction of the Primary, especially if these are established
at resistance or support levels identified by the chevrons or double
chevrons and traded back to the original signal price if that level
is near +$1 from the secondary position.
Look
back in the Archive section to the weeks during 12/19, 12/23 of
last year, and 01/02 and 01/09. There are examples of signals
that come at extremes when it is NOT impossible for the slope to
change. This is key to the Delineator. Our goal is to
identify specific opportunities and trade them quickly for a small
amount. Hitting singles, rather than swinging for the fences,
is the goal here. You won't read commentary predicting how
low, or how high, SPY can trade--or for what reason.
Being
able to discern between ideal and non-ideal signals is important
depending on your level of trading proficiency and what makes you
comfortable making a decision. Being certain that the slope
of the Primary cannot change against your position frees up many
more opportunities.
12:35
data
Feb
20: 12:00pm
Extreme
negative signal weight continues at -2746, yet the Change is only
-55. As stated previously, in a typical short signal (or long)
we'd see the Change in triple digits. Any decrease in signal
weight will cause the Change to rise quickly resulting in a slope
change risk on the Primary against the current short signal.
Feb
20: Enter short issued, Enter Short confirmed 11:30 SPY 76.74
The
Enter Short was confirmed at 76.74 at 11:30am. The Plus a
Buck model is now short at 76.74 with a GTC cover in at 75.74.
Feb
20: 11am SLOPE CHANGE NEGATIVE CONFIRMED
The
slope change down confirmed at 11am (no email went out, still having
problems with it). The next signal will be an early enter
short.
Feb
20: 10:33 EARLY SLOPE CHANGE NEGATIVE ISSUED
Just
as I posted the 10:30 comment, signal weight ticked to -2180 triggering
an early slope change down. The slope change will confirm
at 11am IF signal weight is greater than -2140.
NOTE:
The signal pattern today is going to be very slow because
the Primary is already so fully extended down. For a short
signal to be issued today, the Slope needs to be -80. Because
the Primary is so low, the Slope will not have the normal acceleration
typically seen at a slope change. In fact, the Primary still
wants to rise evidenced by the relatively small Change number relative
to the current signal weight (-2000). Any short signal issued
during these conditions will carry much higher risk than a typical
signal because of these facts. Remember, the Delineator is
designed to identify those periods where low risk trades can be
initiated. Understanding the way the Delineator moves is key
to determining a low from high risk point in time; risk being measured
by the likelihood of the Primary changing slope against a position,
not our perception of "risk" in the market.
Feb
20: 10:30
An early
slope change was not issued at 10:30am as expected. An early
slope change down will be issued at 11am if signal weight is -2140
or more.
Feb
20: 10am
A slope
change down is expected next bar if signal weight remains near -2000.
Feb
20: Opening Read
9:15am:
There
should have been a reasonably decent move up in SPY yesterday following
the slope change. There is a sizeable gap from the opening
on 2/17 (82.80 and 80.50). With the Primary fully extended
down at the opening yesterday, SPY should have traded up into the
gap. Signal weight turned strongly negative yesterday mid
morning, and given the pre-opening decline today, we will most likely
see a slope change down and a short signal this morning . Failure
of price to follow the Primary when it is fully extended is a very
bearish sign.
9:40am:
Continuing from the comments above, signal weight just after
the opening is -1800 and the Change -57. A slope change down
is expected in about 3 bars.
9:50:
Feb
19: Closing Read
The
Primary has not shown the typical behavior following a slope change
from extremely low levels which is quite bearish and supportive
of the downtrend identified by the Secondary. If signal weight
remains negative tomorrow, we will get a slope change down and a
short signal which should take SPY back to the November 2008 lows.
Please re-read Feb 18th's Closing Read #2 below.
Feb
19: 3:15
Signal
weight has turned strongly negative at -1277, the Change -44. A
slope change back down on the Primary may occur in 6 bars (slope/change=#
of bars: 241/45=6.15. A slope change down would then
lead to a new short signal.
Feb
19: 3pm
The
Primary is now -12000, the Slope +285 and the Change -23; signal
weight has been negative averaging -700 for the past three hours.
The trading model is neutral, gray color on the Primary and
thus far the lows of the day have held.
Feb
19: 12:30
Quite
bearish behavior thus far today for the Primary, but all the comments
made thus far this morning stand. I'm off to the gym, next
update at 3:00pm.
Feb
19: 12:00
Signal
weight has turned weakly negative. If the Change turns negative
SPY will take out the lows before bouncing. The key is how negative
signal weight becomes. If it stays between -500 and zero,
price will resolve back in the direction of the Primary. Of
course, you'll need a copy of the program running on your computer
to see this in real time (advertisement).
Feb
19: 11:15
The
opening gap has been filled and it is now impossible for the Primary
to change slope down today and most likely tomorrow as well. SPY
should make a run at testing 80.40, 81.40, then 84 as long as signal
weight remains positive.
Feb
19: 10:30
Feb
19: 10am Slope Change Up/Exit Short confirmed at SPY
80.01
As expected,
the Primary has changed slope back up (finally). Any move
back to the lows will resolve back up in the direction of the Primary
and can be traded as such. As the Secondary is negatively
sloped, the trading model is neutral (gray color), so a long signal will not be
issued. SPY should move to the last break down level which
is 81.40+-. Additionally, the Primary's value should also
move from -15000 to at least zero if not +8000 or more. The
last several Primary cycles have lasted about 4 days.
Feb
19: Opening Read EARLY EXIT SHORT/EARLY SLOPE CHANGE UP
The
slope change/exit short signal that has been expected will occur
at 10am if signal weight is greater than +320
Feb
18: Closing Read 2
The
behavior of the Primary from the slope change on the 9th is atypical
and similar to the behavior during the depth of the November
decline. The Primary reached -18000 and the Slope remained
nearly flat for days with no new signals issued. This chart
is shown below: notice how flat the Primary was from 11/12-11/19.
It stayed between -8000 and -12000 before dropping to -18500
on the 21st. Notice how the orange line--the Change, rises
while price is falling. A classic picture of a balloon underwater
and more than a 7 point potential just back to the prior level on
the 19th.
Exogenous events
are driving price at the moment extending the duration of the current
downcycle, which is terminating. The next signal will be a
slope change followed by a rise in price in a more volatile environment.
The Plus a Buck strategy will not be participating in the
next reversal as, most likely, at the time of the slope change the
Secondary will still be down.
Feb
18: Closing Read
Surprisingly,
no slope change (exit short) signal today. Even with the strongly
negative signal weight averaging -1500, the Slope still rose from
-469 at the opening to -106 at the close. There should really
have been a slope change up today but the signal weight prevented
it. The Primary is fully extended down and it is just a matter
of time before we see a slope change up. With the Secondary
negative, no long signal will be issued as only short signals can
be confirmed while the Secondary is negative.
Feb
18: 10:20am
The
Change on this bar is +55 even though we have strongly negative
signal weight of -1750. A slope change up is expected later
today, moves to new lows are unsustainable.
I have
appointments the rest of the day, this is the last post until this
afternoon. Email users will get any signals generated while
I am gone.
Feb
18: 10am
Signal
weight has turned negative at -940, but notice that the Change is
still a strong positive number. Unless driven by exogenous
events, a slope change up will occur later in the day. Any
moves below yesterday's lows are unsustainable.
10:10am:
The Plus a Buck target of 78.69 has been achieved (amazingly).
Feb
18: Opening Read
At the
opening, signal weight is +600, the Slope is -469 and the Change
is +185. Predicting when a slope change on the Primary will
occur is accomplished by dividing the Slope by the Change now that
the Change is a positive number. 469/185=2.5 bars or about
1.5 hours.
Feb
17: Closing Read
At the
close, still a balloon underwater with the Change in single digits.
Any rise in signal weight tomorrow will move the Change to
a very large positive number pulling the Slope up with it. A
slope change up (exit short) tomorrow is expected.
Feb
17: 3:30
Single
digits now on the Change. A balloon underwater SPY 79.69 at
this writing.
Feb
17: 3:00
Primary now is -11,369 and the Change only -11. When
the Change gets to zero, the Primary will no longer be able to sustain
any further decline. This current condition of the Primary
is virtually opposite to a slope change: at a slope
change the Primary cannot change slope again (reverse).
Feb
17: 2:30
Notice
now the Primary has passed -10,000. Signal weight remains
excessively negative, the Change is -17. Conclusion: The Primary
must now start to rise, any further decline in SPY is unsustainable.
Any move in signal weight to a less negative position will
make the Change pass zero and rise quickly.
Feb
17: 1:50
Very
close now...only -28. While we're not quite there yet, any
reaction lower to 79.42 could be bought as part of a new position.
Feb
17: 1:32
Still
waiting...ok...here's a chart.
Feb
17: 1:15
About
3 bars from now the Change will be very close to zero. If
SPY is at or below the lows from this morning, any further decline
has the potential to set up a large reversal up into the gap area
from the opening...81.45 and up. If signal weight becomes
less negative, the Change will move to zero and above very quickly.
Feb
17: 12:50
The
signal weight is now as negative as I have ever seen it. Yet
the slope is now only -47, down from -55. If signal weight
remains this strongly negative for the next several hours, the Change
will be near zero and cannot be pushed any lower regardless of the
signal weight. If, during this point in time, the price moves
strongly to new lows, those lows can be bought for a large reversal
trade. It's too early at this writing but soon.
Feb
17: 12:25
We're
just going to watch the numbers, no picture charts, to observe the
manner in which signal weight (SW) affects the values of the Slope
and Change. What we want to look for is when the Change nears
zero while signal weight is at an extreme. When that happens,
any price moves in the direction of the Primary are unsustainable
and reversal transactions can be made.
With
that in mind, look at the table above. Signal weight is already
excessive at -3055. The Change on this bar is -55 and is already
declining from the opening (see below).
Feb
17: 11am
Excessively
strong signal weight continues. As the day goes on, the Change
will become less and less because signal weight is already at a
negative extreme. At some point today or tomorrow, there will
be a balloon under-water scenario that will identify a reversal.
Feb
17: Enter Short Confirmed at SPY 79.69
The
short signal confirmed as expected. Typically, we'd like to
see a signal come in after seeing the Primary complete a cycle
and be near a positive or negative extreme with no chance of reversing
slope. In this case, a slope reversal can occur quickly with
a modest improvement in signal weight. Hence, all things being
equal, this short signal is a high risk signal.
Feb
17: Early Enter Short
Signal
weight of -2320 was needed to turn the Slope to -80 which just happened.
An early enter short was issued at 9:46 which will confirm at 10am
if signal weight is greater than -2320.
9:55am:
Signal weight is -2471, the Slope -87 and the Change -94.
With SPY already down substantially and the Primary already
-6000, this short signal is not in the ideal position as only a
modest move back in signal weight will turn the Change quickly.
Feb
17: Opening Read
An early
slope change negative was triggered at 9:32am this morning. As
the Secondary is already down, a short signal may be issued later
this morning. With the Primary already at -6000, it will take
ever stronger signal weight to push it lower.
9:45:
Notice that with the Slope at -78 and the Change at -85, we can
expect an early enter short very soon.
at
the opening:
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