Closing  Mar 20, 2009

Primary Trend=Up

Age of current cycle=7 days

1st target level=78.30 Achieved 3/17 (78.29)

2nd target level=80.76 Achieved 3/18

3rd target level=86.87

PM Update Mar 20:  The Secondary lost 135 ticks to close at +213. It will take several days of negative signal weight to turn the Secondary over.  

AM Update Mar 20: Weakly negative signal weight of -262 after the opening has the Secondary losing 50 ticks to +298.  The Secondary cannot turn over for several days.

PM Update Mar 19:  The Secondary lost 40 ticks to close at +348.

AM Update Mar 19:  The Secondary cannot change slope down for several days even with strong negative signal weight.

PM Update Mar 18:  Exogenous events were responsible for the move up today, but none the less in the direction of the Secondary which gained 78 ticks to +389.  The 2nd target level was achieved today at 80.76.

AM Update Mar 18: Just after the opening, the Secondary is lower by 89 ticks.  The Secondary cannot turn over for several days and can absorb the Primary downcycle that is beginning.

PM Update March17 Close:  Very strong signal weight of +1998 has the Secondary gaining 86 ticks.  SPY reached 78.29 a penny below the 1st target level identified at the origination of the new uptrend last week.

PM Update Mar 17: At 2pm signal weight has turned strongly positive at +1225, The Secondary picking up +61 ticks. A third target level of 86.87 has been added.

AM Update Mar 17:  Just after the opening, signal weight is zero.  The Secondary cannot turn over today.

PM Update Mar 16:  The Secondary gained 16 ticks to +224 today.  The Secondary cannot turn over tomorrow.

AM Update Mar 16: Just after the opening, the Secondary has gained 41 ticks to +249.  The Secondary cannot change slope for at least two days.

Secondary Study: Positive Divergence

NOTE:  (posted 03/08/2009)  Shown in the chart above is the positive divergence (A) that we mentioned last week that was developing on the daily chart.  Note that the slope of the orange line (Slope) is generally positively sloped in contrast to the strong downward trend in price, SPY.  Seeing positive divergence develop while SPY made new cycle lows suggests that a strong reversal in the daily trend is possible.  This pattern typically is accurate, both at major tops and bottoms.  The motion of the Primary is the key to whether we are at a turning point on the daily chart.  As the Primary is -10,000 and nearly over extended, unless affected by exogenous events, a move back to 78-80 on SPY over the next few weeks is possible.  Of course, the Secondary would need to change slope up first.

The last time this pattern played out was in late December of last year, also seen above.  During that period, negative divergence was seen.  Notice the pattern (B) that developed then.  It's subtle, but as Price made slightly higher lows and higher highs (chevrons up/down) the orange line was making lower lows and lower highs suggesting a reversal of trend was possible.  Once the final push was made on the Primary during that period, price collapsed and SPY fell 25% over the next two months.

Hence, since a slope change up is expected Monday on the Primary, increased volatility on the upside may well define the character of this coming week's price action.  Signal weight, as always, will be the key.

UPDATE 03/15/2009:  Last week's prediction on the 8th of "increased volatility on the upside" certainly proved accurate.  For the coming week, we can expect the Primary to complete a downcycle that began mid day on the 13th.  For the Secondary to turn back down this week, strongly negative signal weight for two days will be needed that would put the Slope of the Secondary near zero or slightly negative.  If only average to modestly negative signal weight is seen (-1300 to -800), then the Slope will continue to be positive and the next signal on the Primary should be another long signal.  The Primary's downcycle should complete mid day Wednesday.

Mar 20: Closing Read

At the beginning of the week, the Primary was expected to turn down and complete a down cycle.  The motion of the Delineator is a function of signal weight and time.  As posted earlier in the week (scroll down), only extremely strong signal weight could prevent the Primary from declining.  Hence, any price gains during such periods are unsustainable.  Excessive signal weight eventually moderates and slope changes quickly follow.  Notice that the Primary's last signal was a slope change down prior to the highs that were made on the 18th.

The next most likely signal next week will be a long signal.  Looking at the numbers on the close, we see that with -1965 signal weight, the Change is only -25.  Any moderation in negative signal weight will move the Change to a positive number.  When this happens, the first part of a slope change is underway.

If you've been watching these pages, there is a free 30day trial including the free data feed.  Why not have the Delineator run in real time next week on your computer? (advertisement)

Mar 20:  2:15pm

Signal weight has turned more strongly negative at -2035, the Change at -54, SPY making new lows on the day.

Mar 20: 1:00pm

Signal weight has turned strongly negative at -1197.  The Delineator cannot change slope back up today.  Tracing the single and double chevrons up, levels for the downcycle are 77.82, 77.20 and 75.80 (double chevron on 3/17).

Mar 20: 12:00pm

Mar 20:  11:15

Signal weight turning a bit more negative as SPY approaches 78.  

Mar 20: 11am

Weakly negative signal weight persists.  A lot more interesting stuff going on in space today than on the Delineator.  Incredible views of the solar arrays from the 15+ HD cameras on ISS with the Earth (our planet) below.  They're deploying a new solar generator today.

Mar 20: 10am

Signal weight briefly turned positive during the last bar but didn't stay that way.  It will take several bars of +1000 or more signal weight to turn the Primary back up today.  Patience, this is a waiting game now.

While waiting you can watch the NASA TV and today's spacewalk

Mar 20: Opening Read

Weakly negative signal weight of -262 after the opening has the Change at -26.  Not much else to report.

Mar 19: Closing Read

The Primary continued lower today.  There was an early slope change up this morning that never confirmed.  Signal weight had a narrow range today but spent most of the day around +400.  Even so, the Primary lost 1100 ticks today.

There is sufficient strength in the Secondary to remain positive while the Primary attempts to complete a down cycle.  We could get a slope change up and a new long signal tomorrow, otherwise the Primary will continue to move lower.  As always, signal weight will be the key.  Strongly positive signal weight tomorrow early in the trading day will most likely result in a move to new highs.

Mar 19: 3:15pm

The Primary continues to decline quite slowly due to the persistent positive signal weight.

Mar 19: 2:20pm

Signal weight continues to hold in the +500 area.  The Change on this period is +3.79.  

Mar 19: 12:00pm

Signal weight is still holding at a slightly positive number.  The Primary is now +7955 down from +11500 earlier in the week.  The strength in the Secondary continues to be felt in the Primary.  Remember, the two Delineators are computed the same but at different time intervals.  The behavior seen in the Primary is also seen on the Secondary, but over a longer time frame.  Unless signal weight turns strongly positive, no new signal will be issued for several days.

FYI: To watch something really fun, the new Shuttle Mission is in orbit this link will open a new window where you can watch NASA TV while waiting for the next slope change.

Mar 19: 11:30

Signal weight continues weakly positive with brief moves to +800 or so only to drop back quickly to +400.  However, as can be seen in the numbers below, the Slope continues to get more negative and the Change remains negative as well.  The trading model is neutral with no positions.  

Mar 19: 10:30am

Signal weight of greater than +1420 is needed this bar to confirm a slope change.

Mar 19:  10am Slope Change Not Confirmed

Signal weight has declined to +630 below the number needed for a slope change up to confirm.  Also notice that the Change number is again negative as well.

Mar 19:  Early Slope Change

An early slope change up has been issued that will confirm if signal weight is greater than +1120 at 10am.

Mar 19: Opening Read

Signal weight of +1120 is needed this bar to turn the Primary back up (again).  It is possible for a long signal today but it will take signal weight greater than 2000 for several hours to do it.  The Primary still needs to complete a downcycle as I've been saying ad nauseam now since Monday.

Mar 18: Closing Read

The Primary continued lower until exogenous events (FOMC statement) pushed signal weight from -1400 to +2100 in the span of an hour.  The Primary has not changed slope up as can be seen from the chart below.  A slope change up is likely tomorrow if positive signal weight continues.  The Primary is now at +8229, down from +11560 at the opening.

Mar 18:  Slope Change Down Confirmed

The slope change down has confirmed. As the Secondary is up, no short signal is possible.  The trading model is neutral and I'm on my way to the golf course.  The Primary can not turn back up today.  This is the last post until after the close.

Mar 18: Opening Read   EARLY SLOPE CHANGE DOWN ISSUED

Just after the opening, the Primary has issued an Early slope change down that will confirm at 10am if signal weight is -80 or less.  The Primary has been fully extended on the upside for the last two days and must complete a down cycle if the uptrend on the Secondary is going to resume and achieve the 2nd and 3rd targets.

Mar 17: Closing Read

A slope change confirmed at 3pm as very strongly positive signal weight continues to push the Primary up.  The strength of the Secondary is certainly being felt in the Primary.  If you look at the Secondary section above you will see a very strong Change in that time scale.  A new long signal may be issued tomorrow with the same identified risks as the last long signal yesterday.  To keep the Primary rising, ever increasing amounts of signal weight will be needed...so any signal will be a high risk signal.

Mar 17: 2:30pm

An early slope change up will be issued this bar if signal weight is greater than +1420.

NOTE:  I have an appointment. Next post after the close.  Automated signals are on.  If you're not signed up for auto emailed signals, use the link above to apply.

Mar 17: 2pm

An early slope change up will be issued if signal weight this bar is +1600 or more.  

Here's an important point:  If the signal weight today after the slope change had gone to a moderate to strongly negative signal weight and the price bounced up to where it is at this point, and the Change a strongly negative number (-135 or so), then a strong short position could be built.  Why?  Because the negative signal weight along with the strong Change number would assure that the price action would resolve back down in the direction of the Primary.  The difference at the moment is that we have strong positive signal weight, hence the weighting is not supporting a short even though the direction of the Primary is down.

Certainly our expectation is that the Primary will complete a downcycle before an advance above the most recent highs can be sustained.  And we already know that if the Primary flips back on itself like it did yesterday, the reliability of that trade will be low for the same reasons it failed yesterday:  it takes too much signal weight to keep it rising.

Mar 17: 12:40

Signal weight has turned strongly positive at +1184. The Change is now +13.

Mar 17:  12:00

Signal weight has turned modestly positive at +759, the Change now in single digits at -7.  The upside influence of the Secondary is being felt in the Primary and it is possible for the Primary to turn back up today, possibly generating another long signal as well.  As always, signal weight is the key to the direction of the Primary.

The discipline of the Delineator is not to trade every move, only those moves that are supported by the best confluence of the data as it is being generated.  This equates to less risk and more certainty to the direction of the Delineator and its component parts.  Forcing trades just to be in the market so that a move isn't missed is the least effective way to make money trading.  Waiting until everything lines up creates opportunities that allow us to weather counter trend price movements against our position.  Without that support, we're left to our emotions to dictate our response.  

Mar 17: 10:30  SLOPE CHANGE / EXIT LONG SIGNAL CONFIRMED

The Slope Change / Exit Long signal has confirmed at SPY 76.06.  No short signal will be issued as the direction of the Primary is not confirmed by the direction of the Secondary.  As expected, the Plus a Buck (actually 80 cents) trade did not achieve its target.  The trading model is now neutral.  It is still possible for the Primary to turn back up if signal weight is greater than +1600.  

Mar 17:  EARLY SLOPE CHANGE DOWN / EARLY EXIT LONG SIGNAL ISSUED

An Early Slope Change / Exit Long signal has been issued that will confirm at 10:30 if signal weight is less than +460.

Mar 17:  Opening Read

Signal weight is effectively zero at the opening.  A slope change on the Primary is expected this morning unless signal weight turns strongly positive.  With the Change -78 and the Slope +63, we can expect an early slope change down / exit long signal next bar.

Update 9:45:  Signal weight is now -880, the Change -125, Slope +17.  Signal weight of -1260 is needed this bar to trigger an early slope change.

Mar 16: Closing Read

Today's long signal has not worked as cautioned all day from the opening on.  Today's action is a classic example of a reversal in price when the Primary is fully extended at an extreme.  When more and more signal weight is needed to keep the Primary in its slope, a reversal in price is very near at hand.  This pattern happens over and over again using the Delineator and offers experienced traders opportunities to profit from this knowledge.  By understanding the motion of the Delineator, and the signal weight needed to move it in one direction or the other, buying the highs or selling the lows can be avoided and turned into opportunities for profit.  Of course, you'll need the software running on your computer in real time.  

Our expectations for the next two days are unchanged from yesterday's comments shown above in the Secondary section, update 3/15/2009.  We can expect a slope change down tomorrow and at least two days of a declining Primary.  If you have any questions or would like to understand more how this works, do not hesitate to contact me via email.

Mar 16: 3:30pm

Signal weight is now only +973, the Change -45 and SPY has been declining since the Slope turned negative.  Experienced traders can use periods such as today's to establish counter trend positions when the Delineator cannot rise or fall any further.

There are a multitude of ways to use the Delineator to improve your trading.  The Plus a Buck strategy is just one way to use it and learn how the Delineator works.  As always, your success is dependent on your ability.  But once you learn the various patterns the Delineator makes, especially at short term tops and bottoms, you can discover many ways to use this knowledge.  By focusing on the motion of the Delineator, and ignoring price, successful strategies can be created and employed.

Mar 16: 3pm

Signal weight has turned from +2115 to +1515 and the Change is now -18.  If today's long signal had come when the Primary had just changed slope at -10,000 instead of +10k, there would have been plenty of energy stored up that would have allowed any counter trend move to resolve back in the direction of the Primary.  That Change number is SO important to look at because it tells us whether the Primary is gaining or losing strength.  We want to focus our trading at points in time when it is gaining strength in the direction of the signal.

Mar 16: 2:30pm

Signal weight at +2115 has the Change at +13.  Any reduction in signal weight below +2000 will bring the Change toward negative numbers and start the process for anther slope change down.  The gains in SPY today are unsustainable until the Primary can go through a down cycle.

Mar 16:  12:30

Signal weight continues to rise and is now at +2180.  The trading model is long SPY at 77.31 with a GTC exit at +.80 @ 78.11.

Mar 16: 12:00   Long Signal Confirmed at SPY 77.31

A long signal was issued at noon at SPY 77.31.  This is a high risk signal for previously described reasons below.  

Mar 16: 11:30  SLOPE CHANGE UP CONFIRMED  EARLY ENTER LONG SIGNAL ISSUED

The slope change has confirmed and an Early Enter Long signal has also been issued that will confirm at 12:00 is signal weight is greater than +1900.

Mar 16: 11am

The Slope Change did not confirm at 11am.  However, if signal weight is greater than +1050 at 11:30 it will confirm as the Slope now is a positive number...but it needs to be positive at the end of the bar to confirm which it did not last period.

For an Early Enter Long to be issued, the Slope must advance to +80.  As mentioned previously, any long signal issued will be a high risk signal due to the extended nature of the Primary and the fact that increasingly positive amounts of signal weight will be needed to keep the Primary rising, else it will decline.  The current period is very similar to the Jan 5-7th period and an opportunity to take profits on recent longs.  Additionally, with just a small decrease in signal weight, the Primary can easily turn back down.

Mar 16:  10:35  EARLY SLOPE CHANGE POSITIVE ISSUED

The early slope change signal has just been issued.  Signal weight needs to be greater than +1500 at 11am for the slope change to be confirmed.

Mar 16:  10:30am

Signal weight needs to be +1500 for an early slope change this bar.  A long signal however is hours away and would be a very high risk signal as mentioned previously.

Mar 16:  10am

An Early Slope Change up may be possible this bar if signal weight is +1740 or more.  Otherwise, the early slope change will be triggered next bar as the Change is now greater than the Slope.

Mar 16:  Opening Read  (see Update 3/15/2009 above)

Signal weight is +1020 causing the Change to rise by 14 ticks.  It will be possible for the Slope to change back up today which may trigger another long signal.  However, as readers to these pages know, it will take increasingly positive signal weight to keep the Primary from declining.  Any long signal that may be generated will create a very high risk signal.  Readers may wish to review the week ending on Jan 9th in the Archive section, paying attention to Jan 5-7th.

Mar 13:  Closing Read

Signal weight closed at +1060 and the price did in fact test the highs again after the slope change as suggested in an earlier post today.  Also notice that the Change is now a small positive number at +13.  To keep the Primary rising next week, ever increasing amounts of signal weight will be needed and even then, any gains from here will be unsustainable.  Until the Primary can go through a downcycle that would last a day to a day and a half (minimum), any further gains in price will reverse.

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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