Closing Read May 21, 2010

Primary Trend=Down

Number of days=17

1st Target= 118.3  achieved 5/4

2nd Target= 117.24 achieved 5/4

3rd Target= 115.19  achieved 5/6

4th Target= 113.10  achieved 5/6

5th Target= 109.64  achieved 5/20

6th Target= 106.33  achieved 5/21

PM Update May 21:  The Secondary lost 141 ticks to -282.  It will still take several days of extreme positive signal weight to turn the Secondary up.

AM Update May 21:   See notice in Primary section.

PM Update May 20:  The Secondary gained 95 ticks to -420.  It's interesting to note the relative position of price and the orange Change line.  If you discount the full extend of the May 6th decline and set its low to 109+-, the pattern the Secondary is making is simply following price, no divergence either way.  What we need to see to begin to expect that a low is being put in, is the orange line rising while price continues to make new or matched lows.

You may wish to look at the June 25 2008 on period on the Secondary for what would be the worst case scenario pattern.  Seeing how that low formed on the Secondary is useful.

AM Update May 20:  The Secondary is gaining 74 ticks to -398.  The 5th downside target was achieved at the open.

PM Update May 19:  The Secondary gained 53 ticks to -322.

AM Update May 19:  The Secondary is gaining 28 ticks to -299.  It cannot turn up today.

PM Update May 18:  The Secondary gained 61 ticks to -269.  5th and 6th downside targets have been added.

AM Update May 18:  The Secondary has lost 121 ticks to -86.  The Secondary cannot turn up today as +3700 signal weight is needed.

PM Update May 17 (2):  The Secondary gained 8 ticks to -207.

PM Update May 17 (1):  Signal weight -1815, the Secondary gaining 74 ticks to -273.

AM Update May 17:  The Secondary is losing 73 ticks to -127.  To turn up, positive signal weight of +3580 is needed.

May 21:  Closing Read

Another gap opening down on extreme signal weight while the Change was strongly positive:  a balloon underwater.  The lows of the first half hour of trading obviously couldn't sustain and another reversal up.  By the end of the first bar, the Change was so high that a slope change up today was a certainty, the Primary reaching -17,989.

It will take many days of positive signal weight to turn the Secondary up, much less make it trend.  The next signal will still be a short signal, but aggressive users should continue to take advantage of the increased volatility especially since the upside targets from here are so easily identified.

May 21:  NOTICE:

I have had to go out of town unexpectedly.  I will review today's activity on Saturday.  I will have the charts streaming.  

May 20:  3:30

I have to leave before the close so this post will serve as a closing read.  The Primary is now as fully extended down as it can get.  The Slope is at a maximum.  Only further extreme negative signal weight tomorrow will keep the Primary from wanting to turn up.  When it does, we can expect price to retrace the last couple of days.  The bottom of the gap at 114 is certain attainable.  However, given the values in the Secondary now, we shouldn't expect that this is "the" bottom.  I would expect to see an unconfirmed up cycle on the Primary play out and then another short signal.  Any further price decline from today's low is unsustainable in this cycle on the Primary.

May 20:  2:30pm

Price did test the morning lows, signal weight holding -2800+.  The Change is now positive and any moderation in signal weight will move the Change sharply higher and begin the process of the next slope change up.  The Primary is also now very much overextended at -15344.

May 20:  12pm

Signal weight holding -2850, the Change now -15.  Not much more to add, still waiting to see a lessening of signal weight or a retest of the lows.

May 20:  11am

Signal weight -2847, the Change now approaching a lower range at -25.  We've probably seen the lows for the day unless signal weight moves even more strongly negative.  The Primary is now almost -12000 and falling by 435 ticks per bar, but until the Change gets into single digits, we can still test the lows again.  Any reduction in signal weight will result in the Change moving positive and SPY could easily trade back to 110.43.

May 20:  10:20

Signal weight extremely negative at -2773, the Change still strong at -36.  Price making new lows for this cycle.

May 20:  Opening Read

Signal weight -2400, the Change -25 as the down cycle intensifies.  When the Change gets near zero, unless signal weight is still greater than -2000, an opportunity for a reversal will develop.

May 19:  Closing Read  Profit Target Achieved

The trading model profit target of 110.61 was achieved during the 12pm bar.  Signal weight remained extremely negative all day, at one point reaching -2400.  At the close, signal weight was -1731, the Change +8.6 and the Primary now in overextended levels at -10,407.  We should expect to see the Primary begin to turn up if signal weight moderates as only extremely negative weight will continue to push the Primary lower.

May 19:  10:30am  Enter Short Confirmed

The signal has confirmed, the model short at SPY 111.61 with a gtc exit at 110.61.  For aggressive users looking to play a reversal later in the day, the Change value will be the key.  When it goes positive, unless signal weight is still -2000+, that would be the time to begin considering a reversal.  In addition, the Primary must be overextended.

I'd really like to hang around this morning, but I've got an appointment.

May 19:  10:20am

Signal weight expanding down, now -2055.  -1570 confirms the short signal at 10:30.  

May 19:  10am

Signal weight has reversed again, now -1161 and the Change -15.  If signal weight remains negative at these levels for the next hour, a short signal will confirm.  While the model will take the signal, typically when the Primary turns down on itself, and the Change is very low, signals fail about half the time.

May 19: 9:45

Signal weight reversing, now -268.  Doubtful any short signal will confirm today.

May 19:  Opening Read  Slope Change Down Confirmed, Early Enter Short Signal Issued

The slope change has confirmed and an early enter short signal has been issued that will confirm at 10am if signal weight exceeds -1440.  

May 18:  Closing Read

Signal weight reversed from the opening's very strongly positive levels, closing at -1685.  If signal weight opens at -800 or more, the slope change down signal will confirm and the next signal will be an early enter short.  The truncated nature of this last slope change up on the Primary is evidence of the strength of the down trend in the Secondary.  If we get a short signal tomorrow, signal weight will need to be extremely negative and the Change must be a reasonably strong number.  If a short is issued tomorrow, the trading model will take the signal.

In addition, there is the potential for another reversal setup as we had yesterday.  Typically, when the Primary turns back on itself, that move sets up for a big reversal.  The conditions that would need to be present are similar to what I have previously described in Scenario 1 last week.  Basically, we'll need to see the Change a pretty good sized positive number while signal weight is extremely negative and price is gapping down as multiple expansion bars (aka: panic).

May 18:  3:30pm Early Slope Change Down Signal Issued

An early slope change down signal has issued which cannot confirm until tomorrow morning.  Today's reversal in the Primary is very unusual and is evidence of the influence of the downward trend of the Secondary.  A new short signal is possible tomorrow which the 2010 trading model will take.

May 18:  3pm

Signal weight -1691 and an early slope change down signal is possible this bar or next.

May 18:  2pm

Signal weight has reversed, now at -1039, the Change -38 and TTXSlope=3.3 bars.  I'm pretty surprised to see a reversal in signal weight from this morning's very strongly positive levels.

May 18:  11am  Slope Change Up Signal Confirmed

The Slope change has confirmed, the 2010 trading model is neutral as the Secondary is down.

If you set your program to trade without confirmation of the Secondary, you'd be under an early enter long signal as the Slope value is greater than +75.  That signal will confirm at 11:30 if signal weight exceeds -300.

May 18:  10:30am  Early Slope Change Up Signal issued

The early slope change up signal has issued which will confirm at 11am if signal weight is greater than -460.  Signal weight has moderated somewhat but still very strongly positive at +1480.

May 18:  10am

I guess I got the numbers wrong in my opening read because we're not going to get an early slope change up/early exit short signal until the end of the current bar.  If you change your trade window to "trade without secondary" you'll get the program to issue a long signal today if you're aggressively positioning your trading today.

May 18:  Opening Read

Signal weight has opened extremely positive at +1977. the Change +193, and TTXSlope=this bar if signal weight maintains the current level.

May 17:  Closing Read

Signal weight moderated from extremely negative levels to -583 at the close, and the Change +74.  The Primary is now -8345, so it's in a reasonable level to begin to turn up.  I consider that the downside gap I previously identified has been filled.  Price began to diverge from the signal weight as the Change crossed zero again today and recovered the entire drop today.  I expect to see a slope change up tomorrow.  The trading model will obviously not play a long signal but with the increase in volatility, hence the increase in range, aggressive users should change their programs to "Trade without Secondary" on the trade window so their programs will generate a trade.

May 17: 2:45

Signal weight -1938, the Change +12.  The Primary's now -7571 while not yet overextended, it certainly is near to being so.  The lows of the day that were made just before my last posting have been the lows thus far and very close to the 111.58+- area at 111.77.

May 17:  12:25pm

With signal weight -2200 and the Change -15, we're playing out the last sentence of scenario 1 from Friday (see Advanced archive).  By the close, the Primary will be near -8000+ unless signal weight reverses and turns strongly positive.  I'd expect to see somewhat of a bounce within the range today when the Change reaches zero again.  I'm off to the gym, back around 2:30pm

May 17:  12pm

Signal weight -2000 as the Change turns negative and the lows from Friday being taken out.  The top of the downside gap is 111.58+-.  The Primary is now -5000 and should be in the -8000+ range within a few hours.

12:08:  SPY traded to 111.78.

May 17:  11:15

Signal weight now -1145 as price approaches the low from Friday.  If the Change turns negative we could get a big spike lower on -2000 signal weight.

May 17:  11am

Signal weight now -532, the Change +67 and any slope change up further out as the Primary continues lower.

May 17:  10:45am

Signal weight remains in a narrow weakly negative range.  Any slope change up is still hours away and we really need to see signal weight turn more strongly positive.

May 17:  10am

Signal weight has reversed from the opening levels as the down cycle on the Primary continues.  We really should expect to see the value of the Primary get back into the -5000 to -8000 range.  If price breaks the lows from Friday, I'd expect to see signal weight become more negative and price attempt to fill the balance of the downside gap.

May 17:  Opening Read

Signal weight has opened +1138, the Change +191 and TTXSlope=3.5 bars.

May 14:  Closing Read

I drew in that white line to show how much of the gap from 5/10 has been filled.  If you scroll down through the entire week, you'll start to see the volume fill in where there are nulls or voids.  And now we've got dueling gaps--one above to 116.08 and one below to 111.50, a whole group of targets.

With the Change now at +13 and signal weight -2371, we're obviously at that part of the cycle where any further declines in price are unsustainable in the current down cycle on the Primary as the Slope has reached its maximum.  So we should expect a slope change up either Monday or Tuesday.  The Primary isn't yet overextended at -1573, and within a few hours regardless of signal weight at the open on Monday, it will reach -5000 by mid-day.

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