Closing Read Apr 30, 2010

Primary Trend=Down

Number of days=4

1st Target= 118.3

2nd Target= 117.24

3rd Target=115.19

PM Update Apr 30:  The Secondary continued lower, closing down 96 ticks to -96.

AM Update Apr 30:  The Secondary is flat at the open.  +360 is needed to turn it up.

PM Update Apr 29:  The Secondary is flat but still fractionally negative.

AM Update Apr 29:  The Secondary has flipped back up at the open as positive signal weight of +1600 does it.

PM Update Apr 28:  The Secondary lost 27 ticks to -72.  

PM Update Apr 27:  The Secondary closed down 129 ticks to -100, identifying a new down cycle.

AM Update Apr 27:  The Secondary has flipped negative this morning.

PM Update Apr 26:  The Secondary lost 39 ticks to +29.

AM Update Apr 26:  The Secondary is up 5 ticks to +74 and very close to identifying a new up cycle.  We're also seeing better action on the orange line as it's finally starting to show higher highs.  To turn down, negative signal weight of -820 is needed.

Apr 30:  Closing Read

Signal weight closed at the lows of the day, as did price, -1578, the Change -44.  There's still some additional range left in the Change so we'll have to wait to see how signal weight opens on Monday.  If the patterns of the prior several weeks hold, we'll see a slope change back up late Monday.  But if price breaks 118.30, I would suspect that more sustained selling will ensue and we'll finally get the Secondary to complete a more normal looking cycle that should take SPY back to the highs in January, 115.10+-.

Apr 30:  1pm  Enter Short Confirmed at SPY 119.45

The enter short has confirmed at 119.45, the model is short at that price with a gtc exit at 118.30.  118.3 is the low from April 13th on.  Once that level is taken out, assuming it is, more significant downside targets are available.  

Apr 30:  12:30pm  Slope Change Down Confirmed, Early Enter Short Issued

The slope change down has confirmed, an early enter short has been issued that will confirm at 1pm if signal weight exceeds -730, otherwise the following bar.  The 2010 trading model will take this signal for 1.15 target.

Apr 30:  12pm

We're close to an early slope change down signal, -440 signal weight or more does it.

12:03:  Early exit long/early slope change down signal issued.  It will confirm at 12:30 if signal weight is greater than -440.

Apr 30:  10am

Signal weight has turned more strongly negative at -784, the Change -108 and TTXSlope=2.3 bars.  Any short signal issued today will be taken by the 2010 trading model as the Secondary is still in its confirmed down cycle.

Apr 30:  Opening Read

Signal weight +400, the Change -60.  +360 turns the Secondary up hence the signal is back in confirmation.  The trading model is still neutral.

Apr 29:  Closing Read

Signal weight closed just barely under +1600 but enough to keep the Secondary from closing up.  So the current up cycle on the Primary remains unconfirmed.  With the Change at zero, signal weight will need to open strongly positive again or we'll start moving toward the next slope change.  

Remember, when you look back at the chart, you don't always remember when or if an exogenous event was 'responsible' for a particular move.  The drop off on the 27th was Greece, so if you discount that event, price is really back to where it was just prior as is signal weight.  This range bound market continues.

Apr 29:  3pm

Signal weight +1509, the signal back out of confirmation, the Change -2 and I'd expect to see price fall back to levels from the first hour.

Apr 29:  2:30pm

Signal weight closed the previous bar at +1648 so the early enter long signal confirmed at 2:30pm.  At this post, signal weight is +1661, the Change +9.

Apr 29:  12:30pm

Signal weight has remained very strongly positive, but not enough to trigger the enter long signal.  Given the fact that the Change is now +13, one cannot imagine that if we see signal weight increase to +1600 again that it would stay there for very long.  But regardless, the model won't be taking any long signal today because the Secondary is not trending up.  The Secondary is still in a down cycle.  The Primary has also just crossed zero.  I'm off to the gym, back around 2:30pm.

Apr 29:  10am

The early enter long has not confirmed as signal weight has dropped below +1600 needed to flip up the Secondary.  If the pattern of the last month continues, as soon as the Change nears zero, price will reverse.

Apr 29:  Opening Read

Signal weight has opened very strongly positive at +1695, the Change +65.  The Secondary has flipped back up and an early enter long signal has issued that the trading model will ignore.  Any long signal that is confirmed today will quite easily slip out of confirmation when signal weight drops below +1600.  The early enter long will confirm at the conclusion of any bar if signal weight exceeds +1600. 

Apr 28:  Closing Read

Signal weight held only weak to modestly positive levels most of the day.  With the Change only +14, we'll need to get more strongly positive signal weight tomorrow or we'll see another slope change down and short signal.  With the Secondary -72 and once again trending, the 2010 model will take a short tomorrow if one is generated.

Apr 28:  Comment

This is a very good read:  http://us1.institutionalriskanalytics.com/pub/IRAMain.asp regarding the Senate hearings on GS.

Apr 28:  Opening Read  (9:39am)

You see the numbers, signal weight +1264, the Change +154 and TTXSlope=2.7 bars.  The reaction to exogenous events typically plays out in a day or two.  The last several sell offs due to Greece came back quite quickly.  At any rate, until volatility starts to rise, we'll continue along the same pattern as the last month.  The trend in signal weight continues to be very short, that is short cycles resulting in poor trading opportunities.  

If you look at the Change graphic on the Secondary, you can clearly see this 'non-trend' in signal weight evidenced by the flat to downward sloping orange line.  As longer term cycles (monthly) play out, as in daily cycles, the older the cycle the more narrow the breadth as fewer overall issues rise and those concentrated in the indexes make up the majority of the overall move.  That's clearly what we've been experiencing.  That's what the Delineator is telling us and this information is then used to adjust our trading strategies.  

I'm out for the rest of the day.

Apr 27:  Closing Read

Exogenous events were center stage today as the debt of two sovereigns were downgraded.  While the Primary issued a short signal at 10am, prior to the downgrade, the 2010 trading model did not participate in the trade because the Secondary was not trending at that time.  At the close, the Secondary has identified a down cycle as its slope is -100.

Apr 27:  1pm

Signal weight continues to be influenced by exogenous events.

Apr 27:  11:30am

Exogenous events related to a downgrade of a sovereign has resulted in signal weight returning to strongly negative numbers.  Signal weight now -1510, the Change -70.  The 2010 trading model is neutral.

Apr 27:  11am

Signal weight has moderated from the opening's strongly negative levels, now at -608, the Change only -24.  Still nothing to do here but wait for more volatility to return to the market.

Apr 27:  10am  Enter Short Confirmed

Signal weight remains  negative at -924 the Change -49.  The short signal has confirmed but will be ignored because the Secondary is not yet trending.  

Apr 27:  Slope Change Down Confirmed, Early Enter Short signal issued

Signal weight has opened strongly negative at -1395, the Change -92.  An early enter short signal has issued that the trading model will ignore because the Secondary is not trending.  No emailed signals went out at the open.

Apr 26:  Closing Read

At the close, an early exit long/early slope change down signal has issued that will confirm in the morning if signal weight opens negative.  

Apr 26:  1:30pm

Signal weight now +125, the Change -23 and TTXSlope=3.3.  I think the signal weight has eroded due to boredom and I certainly could see price drop back into the recent range.  The Primary isn't overextended at +3000.  This is the last posting until this evening as I have appointments away.

Apr 26:  12pm

Signal weight again lower, +325, the Change -20, pretty dull.  Both X and SPY Timing Accumulators showing lower at this posting.

Apr 26:  11:15am

Signal weight has improved to +800, the Change +4.  The Secondary is now +80 and if it closes at this level, it will identify a new up cycle.  Where can this market go?  See the Advanced section.

Apr 26:  10:40am

Signal weight continues only modestly positive at +444, the Change -15.  A lot of earnings are scheduled for the end of this week and into next, so exogenous events have the center stage for awhile.

Apr 26:  Opening Read

Signal weight has opened modestly positive at +621, the Change -7.  Signal weight will need to get more strongly positive to extend this cycle as price attempts to break out to new highs.

Apr 23:  Closing Read

Signal weight rose above +1000 only during the final hour closing at +1279, the Change +31.  Price is trying to break out above the recent highs on increasingly narrow signal weight.  As the value of SPY has risen above 120, the trading model will need to adjust its price target accordingly to 1.2 per signal.  As the range of SPY has narrowed while its price has risen, trading has become more difficult as one would expect in a lower volatility period.  

Trading other issues with higher betas, that are 1:1 correlated to SPY, should be considered.  X has decoupled recently due to the upcoming earnings release.  But there are plenty of other issues to chose from that are lower priced than SPY that will work fine.  Google finance has a pretty good stock screener that you can set up to look for issues that have already released earnings, or won't for another couple of months, have beta's of 2 and are 1:1 correlated with the S&P or Nasdaq markets.  Remember, if you're using a Nasdaq issue, after logging into the servers, hit F5 not F4 to load the Nasdaq signal weight data, then hit F3 and type in your Nasdaq symbol if your issues is more correlated to QQQ than the S&P.  If you have questions on this, please let me know.

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