Closing Read Oct 30, 2009

Primary Trend=DOWN

Age of Current cycle=8 days

1st Target Level = 102.76

2nd Target Level = 100

3rd Target Level = 98

PM Update Oct 30:  The last two weeks has been classic Delineator at its best: an unconfirmed price move, multiple slope changes with no net price change, a Secondary achieving trend status at -80, followed by the retracement of price back through the levels which were previously unconfirmed, multiple closed gaps and the financial media caught in a bull trap.  All of the target levels identified earlier this week have been achieved, and the lower targets have now been put into range.

AM Update Oct 30:  At the open, the Secondary is gaining 35 ticks to -247.  The Secondary cannot turn up today as +3840 signal weight is needed.

PM Update Oct 29:  The Secondary lost 134 ticks to +212.  

AM Update Oct 29:  The Secondary is losing 124 ticks to -221.  It will take at least 3 days of very strongly positive signal weight to turn the Secondary up.

PM Update Oct 28:  The Secondary gained 101 ticks to -346 as the down cycle accelerates.  The period from October 13th to the 20th clearly shows how divergence in the Secondary is expressed.  It took 8 days for the top to fail during which time the Secondary never confirmed an up cycle (>+80).

AM Update Oct 28:  The Secondary is gaining 23 ticks to -268.

PM Update Oct 27:  The Secondary gained 27 ticks to -245.  There's a gap at 105.82 from Oct 8th and another one lower at 104.12.  Both points in time represent the beinning of the divergent pattern shown on the Secondary since then.  While they can still go lower, such negative divergences typically trade back to the point where the divergence began.  So these levels are actually better targets than I have listed above.

AM Update Oct 27:  The Secondary is losing 55 ticks to -162 at the open.  The Secondary cannot turn up as +4020 signal weight is needed.

PM Update Oct 26:  Signal weight reversed during the 11:30am bar, closing at -1594, the Secondary gaining 74 ticks to -219.  Last week I said the Secondary would begin to extend the current down cycle.  Today's move now brings in down side targets of 102.76, 100 and potentially 98 on SPY.  If we see a normal cycle play itself out, it would last 4-6 weeks.

AM Update Oct 26:  The Secondary has lost 58 ticks to -87 at the open.  To turn up, signal weight of +2800 is needed which is unlikely today.

Oct 30:  Closing Read

It was obvious that a short signal would be issued today.  With the Slope closing yesterday at +707, we knew it would take some time for the Primary to reverse.  It's always easier when after only 1 or 2 bars into the new day you get a slope change and signal, but knowing that a short signal was for sure coming and taking full advantage of this knowledge is what good trading is all about.  The trading model is a device, one way of learning how to apply the Delineator, it's not the only way.

This is a great week to review from the start of the week forward.  I encourage you all to reread the week.  The short up cycle I said would develop if our lower price targets would be achieved has, and sooner.

An enter short signal was confirmed at 1pm at 103.96, a gtc exit at 102.96.

Oct 30:  10:45am

Signal weight remains strongly negative at -1315, the Change -113 and TTXSlope = 2.7 bars.  A slope change down and short signal is still expected today unless signal weight turns positive.  I have meetings beginning in a half hour again, so I'll be gone the rest of the day.  Next week my outside meetings stop and my schedule will return to normal.

Oct 30:  Opening Read

Signal weight -1064, TTXSlope = 4 bars.  As long as signal weight remains negative, a slope change down and a new short signal will be issued late this morning or early afternoon.  I made a few comments in the Advanced section last night.  Also, I sent email to a few users last night with an attached file.  Please be sure to follow the instructions in that email or your program may not work today.  If you're having any problems, please let me know.  I'll have another updated program next week with the new volume features.

Oct 29:  Closing Read

Signal weight closed at +1914, the Change only +16.  Tomorrow, signal weight will need to be very strongly positive to maintain the current up cycle on the Primary, otherwise a slope change will begin anew.  However, since the Slope is +707, it may take quite awhile for a slope change to develop, so the up cycle might continue until Monday or early Tuesday.

Oct 29:  12pm

Signal weight very strongly positive at +1902, the Change +93.  The scenario that was described on the close of Oct 28th is my working scenario although it has been pushed out by a day or so for the next slope change down.  This is my last post until after the close as I have a series of meetings today.

Oct 29:  11am  Exit Short Confirmed

The exit short/slope change up confirmed as expected.  The email did not go out because I was working with yet another version of the software at the time.  Shown below is what the new screens will look like.  The white bars on the left is volume at price rather than volume at time which most people are used to seeing.  Volume at time is meaningless, volume at a price means a lot because it identifies price ranges where volume occurs.  You'll notice bulges and nulls.  Nulls are areas where there's no volume, bulges are where there's a lot.  When price moves through a range of prices, nulls offer little resistance whereas bulges offer a lot.  So, looking at the picture below, we see 3 basic areas where volume has accumulated over the 145 bar period shown. I'll describe this more fully as I get closer to releasing this version.

Oct 29:  10:30  Early Exit Short/Early Slope Change Up signal issued

The early exit signal will obviously confirm at 11am unless signal weight drops to +600.  The early exit signal did not go out in the email because my Internet was down at that time (high winds around here still).  

Oct 29:  10am

An early exit short /early slope change up signal will be issued during the next bar.  The trading model is neutral, no long signal will be issued.

Oct 29:  Opening Read

Signal weight opened extremely positive at +1593, TTXSlope = 2 bars approx.  There's no way the Secondary can turn up for at least 3 days with very strongly positive signal weight, hence, no long signal is expected from any up cycle on the Primary.

Oct 28:  Closing Read

We sure got strongly negative signal weight today! -2470 is equal to -3200 on the old program and represents 92% of all issues trading on the NYSE today.  -8433, the value of the Primary, is equal to 10,900+- on the old program.  With the Change -23 and signal weight as negative as it can ever really get, we can expect the Primary to begin to rise quickly tomorrow and further declines in price for this cycle on the Primary will be unsustainable.  The gap at 104.12 is very close to being filled.

It will also be nearly impossible for the Secondary to turn back up within 3-4 days even with strong positive signal weight.  Hence, we can expect (as stated in last night's closing comments) an unconfirmed up cycle on the Primary followed by another short signal.

Oct 28:  10am

Signal weight has turned strongly negative at -1521 (-1977 old) and the down cycle continues.  With the trading model flat and no additional trading signals expected until after the Primary goes through an up cycle first, I'll be gone the rest of the day today as I have appointments away.

Oct 28:  Opening Read

Signal weight has opened moderately negative at -655 (-851 old), the Change +4.  Per last evenings comments, we are expecting a slope change up today unless signal weight remains strongly negative.  The trading model is flat.

Oct 27:  Closing Read

Another reversal in signal weight today from the opening's positive numbers, resolving back in the direction of the Delineators.   We can obviously expect a slope change up tomorrow if signal weight opens even weakly positive.  With +680 SW needed to get a slope change at the close, only strongly negative weight will keep the Primary moving lower tomorrow.  

With the Secondary trending, we should anticipate more 'normal' signals (ie: ones that work) and it will get easier to make our targets because the range will begin to expand.  If the Secondary's down cycle is to continue for 3 more weeks and ultimately achieve the lowest target level, then we should expect to see the next up cycle on the Primary be rather quick, followed by a more protracted down cycle closing the gaps at 105.82 and 104.12 beginning late this week or early next.

 Oct 27:  1:15

Using the signal weight limit alarms today has been interesting.  At the moment, signal weight is -506.  I've got my upper limit set to -50 and the lower limit set to -800.  Now I'm alerted if signal weight either improves or becomes more negative.  Moving your limits around during the day is a great way to monitor signal weight to changes that might affect your trading.  If signal weight moved to -50, the Stats window shows the Slope would be -30, hence the Change would be +20 or so and the TTXSlope would be moved up to the next bar.  So watching signal weight would key us to a potential early slope change.  Signal weight dropping to -800 would mean that the Change would go negative and the current down cycle on the Primary could be extended.  Hence the alarms keep you focused on signal weight which is, of course, what drives the entire process.  

Oct 27:  11:30

Signal weight -240, weakly negative, the Change +25.  TTXSlope = 3.5 bars at the current level of signal weight.  (Big wind storm here in SB today, power on and off all morning.)

Oct 27:  10am  Profit Target Achieved at 106.31

Signal weight reversed from the opening levels, now at -792.  Shortly after 10am, SPY traded through 106.31 achieving the profit target, the model is now flat.

Oct 27:  Opening Read

Signal weight has opened +794, the Change +97.  TTXSlope shows 2 bars to an early exit short signal.  The trading model is short SPY yesterday from 107.31 with a gtc exit at 106.31.

NOTE:  Users need to adjust the DELN Settings that trigger signals on the Primary to reflect the lowered overall signal weight from the new feed.  To do this, select DELN Settings from your menu bar on the program, and change the Entry/Exit Thres spread required from 80 to 75.  Leave the compress required unchanged at 20.  Then after doing this, select Chart Options, and click "save current as default".  OH...and also change your STATS Calculator to +-75 from +- 80 (thanks Ryan).

Oct 26:  Closing Read

Today's reversal in signal weight came just as the Primary was changing slope.  While the exit signal came, it was apparent that the slope on the Primary could easily change again in another bar.  This knowledge was available by always looking at signal weight and using the Stats calculator to see what the value of the Slope would be given any level in signal weight.  Users therefore could have kept their existing short cover target and simply ignored the exit signal as long as it was clear that a slope change down again was imminent.  But, as always, trading skill determines much of our success.  The model is here for us to learn, it's not the only way to use the Delineator.  Many users have begun to look at the 5 minute charts as faster conditions have developed.

Oct 26:  2:30pm

The enter short signal confirmed at 1pm at 107.31.  Signal weight is strongly negative at -1344.  The trading model is short SPY at 107.31 with a gtc cover at 106.31.  More of the same pattern of erratic spikey price action being moved about by exogenous events still prevails.  However, price has resolved in the direction of the Secondary's down cycle trend and I expect that pattern to continue as well.

Oct 26:  12:30pm  Early Enter Short Signal Issued

An early enter short has issued that will confirm at 1pm if signal weight is greater than -820.  I have meetings for the next several hours.  Several users have mentioned that they are still short the earlier short signal from last week.  Do not add to the exiting short if you did not take it off at the exit signal due to conditions at the time.  There is still much potential for yet another reversal today.

Oct 26:  12pm  Early Slope Change Down signal issued

Signal weight turned strongly negative at -998, the Change -37.  The slope change down signal will confirm this bar if signal weight is -80 or more.  An early enter short signal is expected next bar at the current level of signal weight.

Oct 26:  11:30am  Exit Short Confirmed

The exit signal has confirmed.  There was a fast market just before the bar change with SPY at 108.27+-.  More exogenous events moving markets as the very strongly positive signal weight has turned to +352.

Oct 26:  11am  Early Exit Short Signal Issued

Signal weight moderated somewhat, the early exit signal has been issued and it will confirm at 11:30am if signal weight is greater than +345.  We're obviously seeing more of this same pattern of having 90% of the move in the first hour followed by boredom thereafter.  As the Secondary is still trending down and cannot turn over today, no long signal will be issued.

Oct 26:  10am

Signal weight has expanded to +1788, the Change +132, Slope -110.  We can expect an early exit short next bar.

Oct 26:  Opening Read

Signal weight opened strongly positive at +931, the Change +108.  The TTXSlope shows 2.55 bars to an early exit short.  As +2800 signal weight is needed to flip the Secondary up, it's very unlikely we'll see that today, nearly impossible

Oct 23:  Closing Read

Signal weight closed at -1609, the Change -18.  The trading model has not yet achieved its target as 107.63 was the low for the day.  Monday signal weight will need to open as strongly negative as it is at the close or the Change will reverse and the process of the next slope change will begin anew.  

Still a challenging trading environment but notice how the highs of the week have not been sustained while the Secondary has been showing divergences and has never begun to trend except in the down cycle direction.  I expect more of this to continue for the next several weeks as the down cycle on the Secondary plays itself out.

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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