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Apr
24: Closing Read
Both
long signals this week, Tuesday and today's, achieved their profit
targets. Nice week. Looking back at this week's up cycle
on the Primary we can see a two part move. Typically, during
cycles that bend back on themselves, the second part has more risk
because we already know that it cannot last as long as a normal
cycle. Also, the Change number is small relative to a normalized
up or down cycle origination, hence sustainability is clearly reduced.
From
the model's point of view, it doesn't matter--but from ours it
does because we are risk averse. It's in most of our natures.
So how can we use this where we don't end up avoiding profits
more than losses. Is there a rule of thumb when we can logically
avoid a "bad" signal. I write more about this next
week. For now, please read the Archive section for the week
ended Jan 9th and Mar20 for some insights to this.
Signal
weight closed extremely strong at +1997, the Change now in single
digits at +5. Signal weight determines the motion of the Primary.
Any moderation in signal weight on Monday will cause the Change
to turn strongly negative pulling the Primary down towards the next
slope change either on Monday or Tuesday. Today's strong signal
weight will add to the Secondary making it more resistant to a slope
change early next week.
Apr
24: 3pm
As
long as signal weight is strong and the Primary cannot change slope,
counter trend price movements are opportunities because we
know that price resolves back in the direction of the Primary. Notice
the expansion bar during the 2:30 time period. There was a
price event which moved SPY back to the opening level of the day.
During this period, signal weight remained very strong above
+1400. Price reversed back up taking out the highs for the
day and replicating the entire range thus far in 1 hour.
Since
the model was already flat, and the Change number was in single
digits, there was no "balloon under water" scenario. A
very large Change number is required for that and such actions take
place just after slope changes, not before. But the point
is to illustrate the understanding the motion of the Primary and
know that, baring exogenous events, counter trend price movements
will resolve back in the direction of the Primary.
Signal
weight remains extremely strong now at +2225, the Change +25. We
can also expect to see a slope change down next week late Monday
or Tuesday.
Apr
24: 2:00pm
The
trading model is neutral having achieved its profit target earlier.
Signal weight remains strongly positive but the Change is
now in single digits at +8. So we know that it will take increasing
amounts of signal weight to keep the Change rising. Once it
turns to a negative number, the process of a slope change will begin.
Apr
24: 12:41pm TRADING MODEL TARGET REACHED
AT 86.86
The
trading model achieved its trading goal of 86.86 at 12:41 as SPY
traded to 86.89. The model is now flat and waiting for the
next signal.
Apr
24: 12:00pm
The
trading model continues long SPY at 86.06. Signal weight continues
very strong at +1854, the Change +37.
Apr
24: 11:30am
For
new readers to the real time Journal, here's a Pop Quiz: If
your goal is to make $1000, which transaction do you think has more
risk: A) Buying 100 shares of XYZ stock at $10 or B)
Buying 1000 shares of the same XYZ stock at $10?
If
you answered A, you are right. Why? Because to make
$1000 using transaction A, XYZ would need to rise to $20, whereas
in B, XYZ would only need to rise to $11. So you can see that
risk is NOT a function of the amount of money used in a transaction,
risk is a function of the outcome needed to achieve a goal. Obviously,
it's easier for a stock to rise 10% than 100%.
Signal
weight continues to build to stronger positive levels as shown below.
Apr
24: 11:00am
The
trading model is long SPY at 86.06 with a GTC sell limit at 86.86.
Very strong signal weight continues to build at +1743, the
Change +47. The purpose of all my comments regarding how signal
weight affects the value of the Slope and Change are to allow users
of the software to know well ahead (several minutes) whether a signal
will or will not confirm at the close of the current bar.
This
past signal for example...it was very clear 2 minutes before the
end of the 10am bar (at 10:28am) that the long signal would confirm
because the signal weight was in excess of the amount needed to
cause the Slope value to be greater than +80. Hence, a user
would have already been logged into their brokerage accounts (I
assume online) with their order ready to go so that at the 10:30
minute, they would initiate their trade and get filled as close
to the opening of the 10:30 bar as possible. This is the entire
purpose of the program. Waiting to see what happens to price
is a breach of the discipline!! (I repeat) Waiting to
see what happens to price is a breach of the discipline!!
Apr
24: 10:30am ENTER LONG SIGNAL CONFIRMED AT SPY
86.06
The
Enter Long signal confirmed at 86.06. The trading model is
long SPY at 86.06 with a GTC sell limit at 86.86 (plus 80 cents).
Apr
24: 10:00am SLOPE CHANGE CONFIRMED, EARLY
ENTER LONG SIGNAL ISSUED
The
slope change confirmed at 10am and an Early Enter Long signal has
been also issued that will confirm if signal weight is greater than
+1400 at 10:30am. Signal weight has turned strongly positive
at +1595, the Change +58. The double signal crashed my email
program (the only bug still left) so not all of the signals went
out. Users with the software of course don't need the emailed
signals as they already knew what was about to happen.
Apr
24: Opening Read EARLY SLOPE CHANGE UP SIGNAL
ISSUED
An
Early Slope Change up signal has been issued that will confirm at
10:00am if signal weight is greater than +700.
Signal
weight opened at +741, the Change +22 and an early slope change
has been issued. Unless signal weight turns strongly positive,
the Change number will be low and the motion of the Primary will
also be low. But, a signal is a signal because the trading
model doesn't care about these issues. Remember, for an early
enter long signal to be generated, the Slope must be greater than
+80. This will take a few bars unless signal weight is greater
than +1500.
Apr
23: Closing Read
Signal
weight closed at +724 but has remained in a tight range most of
the day. The Primary can change slope in the morning again
and possibly generate another long signal if strong positive signal
weight is present. Notice once again that the Change is greater
than the Slope, hence the early slope change probability during
the next bar.
Most
slope changes occur with strong signal weight. When they don't,
the Primary can flip around. Watching the Change number is
essential in gauging the strength of the Primary's move in any single
direction. The Primary itself isn't extended at +3525. If
strong signal weight is seen tomorrow, the long signal that will
be generated will take price at least up to yesterday's highs and
more likely fill the gap up to 87.06.
Apr
23: 2:45pm
Signal
weight has turned more positive at +537, the Slope is -11, the Change
+12. Users can see that if signal weight remains where it
is, there will be an early slope change up next bar. Anytime
signal weight is between -800 and +800 there's a trendless market.
I'm
off to more appointments today. The next posting will be after
the close as it's nearly impossible for any actionable signal to
be generated today.
Apr
23: 2:15pm EXIT LONG SLOPE CHANGE
DOWN CONFIRMED
The
exit long / slope change down signal confirmed at 1pm. Signal
weight remains weakly negative at -61. If signal weight turns
positive and greater than +660, a slope change up might happen later
in the day. With signal weight essentially flat, there is
a trendless Primary.
Apr
23: 12:30pm
The
early exit / slope change has not confirmed as signal weight was
not negative enough. The early exit signal is still valid
and will confirm this next bar at 1:00pm if signal weight is +200
or less. The software has a STATS window that shows the signal
weight needed to confirm a slope change on the Primary and Secondary
Delineators.
UPDATE
12:46: Signal weight is only -131, a slope change can still
confirm. I am off to the gym so I will be away for the next
hour or so. The email system is on and will send out any signals
if they occur.
Apr
23: 12:20pm
As
of this posting, signal weight is -252, the Slope +13, the Change
-38. A slope change can only confirm at 12:30 if signal weight
is more negative than -520.
Apr
23: 12:00pm EARLY EXIT LONG / EARLY SLOPE
CHANGE DOWN SIGNAL ISSUED
As
expected from the previous post, the Delineator has issued an Early
Exit Long / Early slope change down signal that will confirm at
12:30pm if signal weight is -520 or more. The trend of signal
weight thus far today has been very weak both on the positive and
negative side.
Apr
23: 11:45am
We
can now see that the Change is greater than the Slope, meaning that
an early slope change will most likely be issued at the beginning
of the 12:00 bar in 15 minutes.
Apr
23: 11:00am
Signal
weight is -257, the Change -57, the Slope 129. An early slope
change down / early exit long signal is now expected in 2.2 bars.
Apr
23: 10:30am
An
up and down day on signal weight thus far. Signal weight is
now +189, the Change -44.
Apr
23: 10:00am
Signal
weight has turned negative at -373, the Change -77. A slope
change / exit long signal is expected later this morning. New
readers should be aware that the trading model DOES NOT use enter/exit
signals as its methodology. A profit specific target (plus
a buck) is used. The slope change down is an exit long signal
meaning if the profit target wasn't achieved, the position would
be exited at the slope change. Since the trading model achieved
its target two days ago, the model is flat with no positions.
A
slope change down is expected now in 2.9 bars (Slope/Change=# of
bars)
Apr
23: Opening Read
Weak
positive signal weight at the open has the Change -41. Negative
signal weight of -2220 is needed on the Secondary to turn it down
today. With signal weight at +400, a Slope change down is
expected today in 6 bars (3 hours; Slope/Change=# of bars). If
signal weight turns more strongly positive, the slope change will
be extended; if signal weight turns more negative, the slope change
will occur sooner. It's all a matter of signal weight.
Apr
22: Closing Read
Signal
weight spent most of the day in excess of +1000 only to give it
mostly up during the last half hour. Exogenous events were
most likely the cause of the large expansion bar down during the
last half hour. Signal weight ended the day at +310 with the
Change -57. Tomorrow will be the second full day of the current
up cycle on the Primary. Strong positive signal weight will
be needed to keep the Primary rising else we can expect a slope
change down tomorrow. The trading model is neutral having
achieved its goals yesterday.
Apr
22: 10:30am
Today's
early weakness in price and signal weight has reversed and resolved
back in the direction of the Primary. I cannot overstress
the importance of this relationship. Especially early in a
cycle, users must fight back the urge to respond to price movements
and instead focus on the motion of the Primary. While signal
weight may have remained negative, a slope change isn't a slope
change until it actually happens. Anticipating what may happen
hours away leads to emotional responses based on fear or greed.
The motion of the Primary is dependable and it is SLOW.
This
is the last post of the day until after the close. I have
appointments away.
Apr
22: 10:15am
Signal
weight has reversed and is now +503 and building, the Change -21.
Price has resolved back in the direction of the Primary and
is making new highs for the current up cycle on the Primary.
Apr
22: 10:00am
Signal
weight remains negative at -981, the Change -94. An early
slope change down may be issued in 3 bars (Slope/Change=# of bars
= 3.07). However, a slope change isn't a slope change until
it actually happens. Price continues to resolve back near
the highs of the day as of this posting.
Apr
22: Opening Read
Negative
signal weight of -1036 at the opening has the Change -108 and the
potential for a slope change and exit long signal later in the day.
After the close yesterday, SPY continued to trade higher.
Users who may not have executed during the day session had
the opportunity to exit during after hours trading. One of
the benefits of using SPY is being able to trade it before and after
the close.
Negative
signal weight of -2520 is needed to turn the Secondary down. The
trading model is neutral having achieved its profit target yesterday
2 hours after the signal.
Apr
21: Closing Read TRADING MODEL PROFIT TARGET ACHIEVED
AT 85.12
The
trading model achieved its profit target during the 3:30pm bar at
85.12. (I believe that's 17 of 18 profitable signals this year.)
Signal weight closed extremely strong at +2075, the Change
+52. We should see the current up cycle run into Thursday
or Friday of this week, again, dependent on signal weight.
There
weren't any good opportunities to add to any positions today
because there weren't any pullbacks. Tomorrow, depending on
signal weight, any such opportunities will have more risk due to
the fact that the Change number will be smaller than it is today.
While we can still expect price to resolve back up in
the direction of the Primary, the first 3 or 4 hours following
a slope change are these "golden" times when the motion
of the Primary is the strongest. Focusing trading during these
periods create the best and lowest risk opportunities for gains.
Apr
21: 2pm
A
long signal was generated at 1:30pm at 84.32. Very strong
signal weight of 1700 continues, the Change is +84. The trading
model is long SPY at 84.32 with a GTC limit sell at 85.12. Any
move lower by price during the balance of today will create an opportunity
to trade price back up to the highs of the day. In another
bar it will be impossible for the Primary to change slope today
leading to a normal cycle on the Primary which typically last 2-3
days.
This
is the last post for today until after the close. I have some
appointments away.
Apr
21: 1:30pm ENTER LONG SIGNAL CONFIRMED AT SPY 84.32
The
Enter Long signal has confirmed as expected. Signal weight
is very strong and any move back toward the 83.60-83.90 area while
signal weight and the Change remain strong over the next several
bars would present a second buying opportunity: the classic
"balloon under-water" scenario. A move back to 83.60
during such a period could be traded back to the 84.35-84.50 area.
The
'Plus a Buck' (plus a percent) trading model is long SPY at 84.32,
with a GTC sell limit at 85.12 (we're still using .80
due to the current level of SPY).
Apr
21: 1pm SLOPE CHANGE CONFIRMED, EARLY ENTER LONG
SIGNAL ISSUED
The
slope change has confirmed as expected, and an early enter long
signal has been issued that will confirm at 1pm if signal weight
is greater than +320. To confirm a long signal, the Slope
must be greater than +80. Since it already is above that number,
the model still waits until the close of the current bar when the
value is greater than 80.
Using
the software, users will be able to determine several minutes prior
to the end of the bar whether the signal will confirm. If
so, then users can be sure they're online with their brokers to
affect the trade at the bar change-over.
Apr
21: 12:30pm EARLY SLOPE CHANGE UP SIGNAL
ISSUED
The
Primary has issued an early slope change that will confirm if signal
weight is greater than +840.
Apr
21: 12:00pm
Signal
weight continues to build and is now +1507, the Change +128. Positive
signal weight of 3200 is needed this bar to get a slope change up,
otherwise, an early slope change and possibly an early enter signal
will occur at 12:30. The Stats windows on the software identifies
the signal weight needed each bar to turn either the Primary or
Secondary over from its current level.
Apr
21: 11:30am
Signal
weight has improved to +1148, the Change +131 and moving forward
the timing to a slope change and new long signal on the Primary.
An early slope change up is expected in during the 12-12:30
bar (230/131=1.7 bars).
Apr
21: 11:00am
Signal
weight is now weakly positive at +494, the Change +118. We
can expect an early slope change up in 3.3 bars with the current
level of signal weight (Slope/Change=# of bars = 3.3). If
signal weight improves, a slope change will occur more quickly.
The gap from 4/9 was nearly filled (off by 17 cents)...might
be close enough.
Apr
21: 10:30am
Signal
weight is now weakly negative at -442, the Change +88. The
software has audio alarms built into it for days like this when
it's so boring to watch. The alarms go off as any signal is
generated so you don't have to be glued to the screen.
Apr
21: 10:00am
Signal
weight has turned weakly positive at +321, the Change +137. We're
back in waiting game mode to see which way signal weight will turn
as with strong positive signal weight we will get a slope change
up and long signal or with strong negative a middle short signal.
Apr
21: Opening Read
A middle
short signal may be issued today if signal weight is greater than
-1100.
At the
opening, signal weight of -640, the Change +108.
Apr
20: Closing Read
Signal
weight closed excessively negative at -3040, the Change -18. With
the Change only -18, we know that with any moderation of signal
weight, the Change will turn positive. The Primary is -1915
and declining by 902 ticks each bar going forward. Hence we
can project that if signal weight turns positive tomorrow, a slope
change up may occur late in the day.
However,
in the morning we will also know the signal weight needed to turn
the Secondary down. If the Secondary turns down tomorrow,
a "middle" short signal will be generated. Typically,
middle signals only are 50% successful, but they are nonetheless
a valid signal. The last 4 middle signals achieved their profit
targets.
So,
as always, signal weight will be the key to the direction of the
Delineator. Our goal is to be able to identify when a slope
change is likely and focus our trading during the first several
hours following a slope change. For new users, please ignore
price action and focus on learning how the Primary changes slope
and moves through a cycle. Price is the dependent variable,
and we do not use it in the computation of the Delineator. Learning
how to predict the motion of the Primary will enable you to identify
specific periods of time when very low risk trades can be initiated.
During such times, price will resolve back in the direction
of the Primary and thus create multiple opportunities for profit.
Apr
20: 2:45pm
Extremely
negative signal weight continues at -2971, the Change -32.6 while
price continues to make new lows on the day. It's unfortunate
sometimes that prices doesn't bounce around more because just after
slope changes, when signal weight and the Change are strong numbers,
any counter trend price movement creates wonderful trading opportunities
within several hours of a slope change. We haven't seen any
bounces at all today to trade back to the lows. Oh well...next
time perhaps. That's the key here: if the opportunity
doesn't present itself on this cycle, there's always another cycle
coming a few days later.
Apr
20: 12:00pm
Signal
weight remains extremely negative at -2846, the Change -93. Any
attempt by price to move back toward the 85 level today while
signal weight and the Change remain strongly negative would be an
opportunity to trade back to the lows of the day as price will resolve
back in the direction of the Primary. However, only experience
traders should do this as new users should stick to the Plus a Buck
strategy until such time as they acquire the requisite skills.
Apr
20: 11:00am (sorry for posting the wrong times earlier)
Extremely
strong negative signal weight persists at -2752. Possible
downside targets for this neutral down cycle would be the series
of chevron's up on the 15th around 83.80 and there is still that
unfilled gap on the 9th at 82.57.
Apr
20: 10:30am SLOPE CHANGE / EXIT LONG SIGNAL CONFIRMED
AT SPY 84.61
Per
the previous post, the slope change / exit long signal has confirmed.
The model is now neutral. For new users to the site,
the model DOES NOT use an enter/exit signal as the trading model.
The exit signal (slope change) means that the signal is now
over as signals are generated by slope changes. While the
slope of the Primary is negative, price will make a series of lower
lows and lower highs until the next slope change on the Primary.
Signal
weight is extremely negative today at -2541. Several days
of negative signal weight is needed to turn the Secondary down.
If the Secondary turned down tomorrow, a "middle"
short signal would be issued.
Apr
20: 10:00 EARLY SLOPE CHANGE / EARLY EXIT LONG SIGNAL ISSUED
As
expected, an early exit long / early slope change down signal has
been issued. The signal will confirm at 10:30am if signal
weight is greater than -420. With signal weight currently
at -2358 the slope change/exit signal will most likely be confirmed.
Apr
20: Opening Read
Very
strongly negative signal weight of -1716 is present just after the
opening. We can see that an early slope change /early exit
long signal will be generated next bar as the Change is much larger
than the current Slope. As the Secondary is up and cannot turn over
today, no short signal will be issued. The trading model is
currently neutral having achieved its target on Thursday.
Apr 17: Closing Read
I am traveling today which is why there haven't been any posts and why I encourage those who have been watching over the past several weeks to sign up for the software trial and run the Delineator in real time on their computers.
The trading model is neutral having achieved its target yesterday. Signal weight started the day flat then built to strongly positive signal weight mid-day propelling price to a new high for this cycle. The value of the Primary is not currently extended at +5503, rising +236 the last bar. Next week we should see the Primary change slope again probably Tuesday.
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