Closing  Mar 6, 2009

Primary Trend=Down

Age of current cycle=15 days

1st target level=74.60 (achieved 2/23)

2nd target level=none

PM Update Mar 6:  The Secondary lost 4 ticks today to close at -290.  Positive divergence is still present suggesting that the current lows may be the final set of lows during this particular cycle.  Whether or not this will happen will be seen this coming week.

AM Update Mar 6: The Secondary cannot turn up today needing signal weight of +4680 (impossible).  However, the positive divergence is a lot more apparent today as the slope of the orange line is clearly positive while the price action is making new lows.

PM Update Mar 5:  The Secondary gained 116 ticks today to end at -294.  The positive divergence we've been talking about is still seen, even today, on the Secondary.  A 'normal' cycle on the Secondary last 4-6 weeks and strong cycles typically end with these divergent patterns: negative on upcycles, positive on downcycles.  While it is still too early to predict a bottom, seeing positive divergence now hints that further expansive moves lower may be the final push down resulting in a reversal potential.  

AM Update Mar 5:  The Secondary is gaining 39 ticks to -216 today. The Secondary can turn up today if signal weight is greater than +2720 which is unlikely today given the opening negative signal weight.  The positive divergence of the orange line relative to the Secondary and price is of note again today. Notice the pattern of higher highs and higher lows on the orange line since the low on the orange line in February?

PM Update Mar 4: The Secondary lost 180 ticks to close at -179, signal weight closed at +2238.  The positive divergence mentioned below is more apparent at the close as evidenced by the rising slope of the orange line in contrast to the price action.

AM Update Mar 4:  The Secondary cannot change slope up today.  With the Primary changing slope up yesterday, given positive signal weight at the close today, positive divergence is being seen provided that over the next week the orange line does not go lower than it was on Feb. 23rd, the low dot 7 days ago.

PM Update Mar 3:  The Secondary lost 6.5 ticks to close at -357 on closing signal weight of -1208.  As with the Primary, seeing a plus Change on a strongly negative signal weight is a positive sign of the beginnings of a turn on a Delineator.  Still, the Secondary cannot yet change slope up within 3 days of strongly positive signal weight.

AM Update Mar 3:  The Secondary cannot change slope up today regardless of signal weight.  However, notice the positioning of the orange line (Slope).  It is beginning to show the positive divergence typically seen at major lows.  Notice how the most recent lows on the orange line are now rising while the Delineator and price are declining.  We will pay attention to this as it develops.  For now it is too early to predict a low has been established, but it is the first "positive" sign of a low that may be already in place.

PM Update Mar 2: The Secondary continues lower today gaining 117 ticks to -361.  There are no downside targets anymore as there are no prior lows within the last 2 years to use as target levels, SPY has exceeded them all on the downside.

AM Update Mar 2: The Secondary continues lower today. It cannot change slope up.

Mar 6:  Closing Read

A slope change up was never generated as negative signal weight continued.  The Primary is back to -10377 and once again we have strongly negative signal weight with a positive Change.  The Primary wants to rise, but negative signal weight keeps pushing it back down.

Mar 6:  11am

Signal weight has turned moderately negative at -962, reversing the earlier strong positive weight seen at the opening.  The slope change expected in the earlier posts is now much less likely unless signal weight again turns positive.  Notice the pullback in the Change amount.  A few hours at -960 signal weight will turn the Change to zero or possibly a negative number.

NOTE:  This is the last post for the day until well after the close.  New readers are encouraged to sign up for the email signal alerts and existing readers are also encouraged to sign up for a free 30 day trial of the software to run on your computer in real-time. (advertisement)

Mar 6:  10:30am

Signal weight has turned weakly positive at +354 extending the period for the slope change.

Mar 6:  10am

Signal weight of +1300 will turn the Primary up in about an hour unless signal weight turns strongly negative.

Mar 6:  Opening Read

Signal weight is trying to build positively this morning causing the Change to move to +173.  If signal weight remains positive, a slope change up / exit short will be issued later this morning (474/173=2.7 bars).  A slope change up would not generate a long signal as the slope of the Secondary is still down.  The trading model is neutral having achieved its target yesterday.

Mar 5:  Closing Read

Signal weight again stayed extremely negative all day.  The short signal that was issued on SPY at 69.37 achieved its .80 and +$1.00 (depending on what you used) late in the day in the final half hour.  The Primary is now -6933 and not yet over extended.  However, any moderation of negative signal weight will once again move the Change to a positive number and the slope-change process will begin anew.

Mar 5:  3:34pm  The trading target of 68.57 was just achieved on SPY (.80 move).  It also made a buck from the Enter Short price of 69.37 as well.

Mar 5:  2:30pm

Strongly negative signal weight averaging -2900 has maintained since the short signal at 12:30.  A brief rally to SPY 69.75 gave users another opportunity to short given the fact that during that brief rally, signal weight of -2900 was maintained.  (Shooting ducks).  The low on SPY since the short signal has been 68.65, very close to the 68.57 exit limit for .80 cents mentioned below.

Mar 5:  12:30pm  ENTER SHORT CONFIRMED @ SPY 69.37

The enter short signal has confirmed at 12:30 @ SPY 69.37 .  The Plus a Buck trading model is now short at SPY 69.37. Given the lower price of SPY, a $1 change is now 1.4%.  Accordingly, users may wish to adjust the Plus a Buck to .80 cents.  A GTC for the model is placed at 68.57.  As long as signal weight remains negative, any rallies can be shorted for a move back near the lows of the day.

The next post will be at 2:30pm as I have an appointment that will take me away from the computer.

Mar 5: 12:00 SLOPE CHANGE DOWN CONFIRMED, EARLY ENTER SHORT SIGNAL ISSUED

The slope change down on the Primary has confirmed.  An early enter short signal has also been issued that will confirm at 12:30 if signal weight is -1460 or greater.  Given the excessively strong negative signal weight, this signal will most likely confirm.

Mar 5:  11:30  EARLY SLOPE CHANGE NEGATIVE SIGNAL ISSUED

An early slope change down has been issued that will confirm at 12pm if signal weight is -2360 or greater.  An early enter short will be the next possible signal.

Mar 5:  11am

Very strongly negative signal weight continues to build and has reached -2600.  Notice the Change is now greater than the Slope.  This means we should see an early slope change down during the 11:30am bar.  Once the slope reaches -80, a short signal will be issued, possibly during the 12-12:30 bar.

Mar 5:  10am

After a half hour we can project an early slope change down in about 2 hours (476/178=2.67 bars) if signal weight stays strongly negative.  A lessening of signal weight will push the slope change out further.  If we get a slope change down, a short signal would be the next signal as the Secondary is down and would confirm the direction of the Primary.

Mar 5:  Opening Read

Strongly negative signal weight has the Change at -197.  A slope change down and a new short signal is possible today.

Mar 4:  Closing Read

Very strong signal weight was seen all day.  At the close, the Change is now barely positive at +18 with signal weight of +2229.  Ever increasing amounts of signal weight is needed to keep it rising tomorrow, else it will begin to decline.  This pattern of sharp quick rises on the Primary followed by longer term declines is consistent with the negative slope on the Secondary, which is why trading signals are only issued when confirmed by the direction of the Secondary.  

Mar 4:  3pm

During the last half hour signal weight has risen past +2200 and SPY now at the highs of the day at 72.53.  The Primary is -5700 and will be near zero sometime during the day tomorrow.

Mar 4:  1:20pm

Mar 4:  12:00pm

Signal weight is now +2059 and at a high point for the day. For new readers, the gray dots on the Primary indicate a neutral trade model as the current direction of the Primary is not confirmed by the Secondary.  For users of the software, watch as signal weight rises which typically, in this type of pattern from new lows, triggers short covering.

Mar 4:  11:15am

Signal weight is becoming strongly more positive at +1904.  It is now impossible for the Primary to change slope down today.

Mar 4:  10:30am

Strong signal weight continues at +1319.  New readers are encouraged to sign up for the automated emailed signals.  Readers who have been watching for a couple of weeks should sign up for the free software trial. (advertisement)

Mar 4:  10am

Strong signal weight continues at +1768. The trading model is neutral for the Plus a Buck strategy because the Secondary has a negative slope and is not confirming the direction of the Primary.  

Mar 4:  Opening Read

Yesterday's slope change up took virtually all day to trigger, coming in during the last half hour of the day.  New readers should re-read the opening read section of yesterday's posts to understand why yesterday was a day to cover shorts.  Today, we can expect the Primary to continue to rise if signal weight is even weakly negative. Notice the closing numbers from yesterday: strongly negative signal weight equals a positive Change number.  Hence, the Primary can continue to rise with negative signal weight which creates a positive expectation.

At the opening, strong positive signal weight and a strong Change has the Primary rising from -12588.  Since the Secondary is still negative, no long signal will be issued.  The Primary cannot change slope back down today if signal weight stays strongly positive for two hours.  Hence, any retracement from the opening gap can be traded back up as long as signal weight stays greater than +500.  The potential for a strong short covering rally is very high especially given the positive divergence now seen on the Secondary.  SPY can rise to cover the gap at 73.97.

Mar 3: Closing Read  Slope Change Up confirmed at 3:30pm

The Delineator issued a slope change / exit short signal at 3:30pm but just barely.  The slope change /exit short signal came in at 70.23.  Notice at the close that the Slope and Change both are barely positive numbers.  It will take positive signal strength tomorrow to keep the Primary rising or else it will flatline as we can already see that -1200 signal weight creates a +2.43 change.  The trading model is neutral indicated by the gray dots on the Primary.

Mar 3: 1:30

Signal weight has turned strongly negative and the Change is about to turn negative as well.  A further decline in the Primary will send SPY to new cycle lows.

Mar 3: 12:45

Signal weight has become somewhat less negative and you can see the little hitch in the orange line where it flattened a few hours ago.  The Primary is now -12400 and the Change +35.  A slope change is still expected today if signal weight can become positive.

Mar 3: 11:45

Signal weight has turned strongly negative at -1528.  With signal weight this negative, a slope change is not likely as the Change is too small to affect the Slope.

Mar 3: 11am

At this posting signal weight has turned weakly negative at -238, the Change is still positive at +88.  A slope change is still expected later today.

UPDATE 11:13am=Signal weight now -900, Slope -233, Change +53

Mar 3: 10:30

Signal weight has turned weakly negative at +172 and unless it increases, the slope change will be pushed out later in the day.  But even with the weak signal weight, notice how high the Change is @+120.  The Primary wants to rise.

Mar 3: 10am

Signal weight has moderated somewhat from the opening.  Using the numbers, we can see that an early slope change/early exit short signal may be issued in an hour to an hour and a half unless signal weight weakens. Slope/Change=# of bars  366/174=2.10 bars.

Mar 3: Opening Read

As expected, the Change has registered a large up move, +219, due to positive signal weight of +1191 which is still building as of this post.  We can expect a slope change back up later today if signal weight remains positive.  Since the Secondary is still down and cannot turn up today, and the trading model is neutral, no long signal will be issued on a slope change up.

Mar 2: Closing Read

The strongest negative signal weight ever observed pulled the Primary lower closing at -10,300.  The short signal that was issued just after the opening at 72.50 achieved its +$1 target a couple of bars later at 71.50.  While it is difficult for many traders to short a gap down opening, nonetheless a signal is a signal and given the fact that the Primary was not extended, there was nothing that should have kept traders from taking the signal.

Tomorrow, the Primary will be a balloon underwater and we will see the Change rise as regardless of how negative signal weight will be.  Hence, any further moves down tomorrow (unless triggered by exogenous events) will be unsustainable for the current Primary cycle.  But this balloon may take several hours to develop tomorrow.

Mar 2: 3:30pm

Signal weight is -3300. I have never seen a number this big.  The Change is now -16, approaching a balloon underwater.

Mar 2: 2:30pm

Signal weight is now at a negative extreme at -3191, it cannot become more negative.  Notice how the Change now is -17.5 and we can easily project that given no change in signal weight, the Change will approach zero quite soon.  If signal weight simply moves from -3190 to -2000, which is still very negative, the Change will clearly become a positive number and we'd expect to see SPY rise back toward the 72.50 level.  Also notice that the value of the Primary is -8900 and will within a few bars be near -10,000 again.

NOTE: We have heard from the data provider and they cannot load the history so the 30-minute chart will not fill in and look normal for another 5 days.  The calculation of the Delineator is unaffected and is correct.

Mar 2: 12:15

Now that the Plus a Buck strategy made its target, trying to short a bounce as described earlier in the day should be ignored.  Extremely negative signal weight continues.  At some point either later in the day or tomorrow, the Change will begin to rise while signal weight is extremely negative.  This may present an opportunity especially if the Primary is -15000 or more, but it is far to early to anticipate this now.  The last 7 or 8 signals in a row have achieved their +$1 targets.

Mar 2: 11:38

The Plus a Buck strategy made its target at 11:38 at SPY 71.50.  The trading model is now neutral having achieved its goal.

Mar 2: 11:00

Strongly negative signal weight continues to push SPY to new lows of the day.  There was a brief opportunity to improve on the short signal price of 72.50 during the second half hour in the 72.80 area.  The Plus a Buck strategy is short at 72.50 and has a GTC cover in at 71.50.

Mar 2: 10:30

Mar 2: 10am

Strongly negative signal weight continues.  Gap openings are difficult to trade as most of us know.  If SPY bounces up in the 73-73.35 area while signal weight remains strongly negative, a short at those levels can be put on to trade back to the 72.50 signal level.

Mar 2:  Opening Read

An early enter short was issued during the last half hour on Friday which may confirm at the opening.  The data vendor still has issues showing the past quotes on SPY.

ENTER SHORT CONFIRMS AT 9:32 AT SPY 72.50.  Any attempt to recover from the opening low will be another opportunity to short as long as signal weight remains strongly negative.  Any additional shorts should be played back to the opening low level of 72.20.

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 described herein 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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