Closing Read June 4, 2010

Primary Trend=Down

Number of days=1

PM Update June 4:  The Secondary has closed at -93 and another down cycle has been established.  There is still positive divergence showing on the Change graphic.

AM Update June 4:  The Secondary has flipped back down at the open.  -680 signal weight turns it back up.  Notice that the Change line value is still higher than the previous low value and the positive nature of the slope continues.

PM Update June 3:  The Secondary turned up today.  It still need to rise above +75 to confirm a new up cycle.

AM Update June 3:  The Secondary has turned up at the open as +160 signal weight is needed to do so.  

PM Update June 2:  The Secondary lost 137 ticks to -15.  The Secondary will be able to turn up tomorrow quite easily.

Use your crosshairs to identify 5/27 on the Secondary chart.  Notice the high that day was 110.80.  Now look at today's close.  Notice how the Change value (the orange dot) is higher than it was on the 27th even though price is lower?  Now move your crosshairs to 5/20.  Notice how yesterday's close pretty much equalled the low on the 20th, but notice how much higher the Change value was yesterday compared to the 20th?  This is continued positive divergence and it typically results in a change in trend for the Secondary.

AM Update June 2:  The Secondary is losing 88 ticks to -64.  To turn up, +2520 signal weight is needed.

PM Update June 1:  The Secondary gained 73 ticks to -151.

AM Update June 1:  The Secondary is gaining 70 ticks to -147.  Positive signal weight of +1280 is needed to turn the Secondary up.

June 4:  Closing Read

Signal weight remained extremely negative all day, price dropping back into the lows of the previous two weeks.  The Secondary turned back down but is still showing positive divergence.  Obviously, 108.80 has not provided support and is now resistance to an up move back into the range of this week.

So, with respect to the comparative levels of signal weight and the movement in price, today's action is more in line with the past month's downside pattern than a reversal in trend I have been expecting.  With the Slope value now very near to its maximum, we should expect to see the Primary get into over-extended levels late Monday or Tuesday if signal weight again opens extremely negative.

June 4:  10:30am

Signal weight a bit less negative, price up into the opening gap.  We should expect this down cycle to be similar to the previous up cycle in duration for the same reasons stated in last night's closing read.  The bottom of the gap is 109.58.

 I'll update after the close this evening.   

June 4:  10am  Slope Change Down Confirmed

The slope change down on the Primary has confirmed.  I didn't notice that the opening levels were enough to also trigger an early enter short signal which did not go out.  So, at this post, we're under an enter short signal as well which won't be taken by the model (108.98).  108.80 still remains as an important level to watch.  

I have several appointments today so my last post will be at 10:30am.

June 4:  Opening Read

Signal weight has opened very strongly negative at -2275, the Change -143 and an early slope change down signal has issued.  The Secondary has flipped back down and if a short signal is issued, the model will not take the signal as the Secondary is in a transitioning mode.  At this post, the value of the Secondary's slope is -81, which is greater than the -75 needed to confirm a resumption of the previous down cycle.  The Secondary turns back up at -640 signal weight. 

June 3:  Closing Read

We've seen many times that when a cycle on the Primary begins near zero, rather than at an extreme, cycles are typically short and it takes very strong signal weight to move the Primary to its extreme.  Obviously, negative signal weight tomorrow will turn the Primary down.  If that happens, we should continue to follow the comparative levels of signal weight as we have been doing.  We should also expect that the next slope change up may come from a lower level and support a confirmed slope change on the Secondary if the positive divergence continues.

But, on the basis that the Secondary's process for turning up is intact, and volatility is high, higher signal weight levels would be expected.  If we open tomorrow with +1500 signal weight, the Change will be high and we should expect to see the Primary move up into the +8000 area in a more typical range value.  SPY would then be expected to fill the gap to 111.68.  The next target would be 115.22.

June 3:  2:51

Quite an interesting day for the Primary.  The early slope change down (early exit long) signal issued at 2:30 hasn't confirmed (but is still in effect) and signal weight is again moderately positive.  With signal weight at +596, the Change is only +4.  But as your Stats window tells you, if signal weight advanced to +1600, the Change would be +60, hence the Primary has legs to the upside.

June 3:  12pm

Signal weight has ranged up to +1500 from the previous posting, but has again retreated and is now modestly positive at +589, the Change -32.  The value of the Primary at +4741 has room on the upside, but more positive signal weight will need to develop to keep it rising.  I'm off to the gym, back around 2:30pm.

June 3:  10:30am

Signal weight has reversed, now only +350, the Change -55.

June 3:  10am

An enter long signal has confirmed but will be ignored.  Signal weight expanded to +1500 during the first bar, but has since dropped back a bit.  The Change is negative so signal weight will need to expand further, but still there's no risk of a slope change down today unless signal weight reverses and turns strongly negative.  

June 3:  Opening Read

Signal weight has opened +1299, the Change -11, the Secondary has flipped up and an early enter long signal has issued.  The 2010 trading model will not take this signal because the Secondary is not yet trending (colored green).  But this is the origination of a new up cycle on the Secondary that I've been expecting to see.

June 2:  Closing Read

Signal weight very strongly positive all day after the first hour.  I said during the last down cycle that we need to be cognizant of the comparative signal weights of that down cycle and the next up cycle on the Primary.  Thus far, signal weight has leaned more strongly positive than negative during these two cycles which is reflected by the positive divergence in the Secondary detailed above.  Tomorrow, the Secondary will be able to turn up with only modestly positive signal weight.

June 2:  3pm

Price has held 108.80 as signal weight began to expand again during the 2:30 bar.  If signal weight closes above +2000 today, the Secondary will be able to turn up easily tomorrow.

June 2:  2pm

Signal weight still very strongly positive at +1579, but the Change now +31.  108.80 is being tested again and at this posting doesn't seem to be holding.  This might be a very short up cycle unless signal weight opens tomorrow +2000.

June 2:  12pm

The slope change up has confirmed, the trading model is neutral.  Signal weight has expanded above +1700.

June 2:  11:30am

The early exit short/early slope change up signal has issued and it will confirm at 12pm if signal weight exceeds +1240, otherwise 12:30pm.  

June 2:  10:30am

Signal weight dropped to +300 but has since recovered and now stands at +1251, the Change +96.  We should expect to see an early slope change up signal within the next two bars as long as signal weight remains +1000 or more.

June 2:  Opening Read

Signal weight +1212, the Change +116, TTXslope=3 bars at this level of signal weight.  

June 1:  Closing Read

During the last hour, signal weight turned more strongly negative, price moving below the opening lows and filling the gap from 5/27 at 107.79.  At the close, signal weight was -1770, the Change -34.  The Primary is +1279 and still not in its lower negative range.  

June 1:  1:30pm

Signal weight now only -400, the Change +25.  Price bounced off of 108.80 during the 12:30pm bar as signal weight began to become less negative.  We're still some time away from any slope change up unless signal weight reverses and turns strongly positive, otherwise I'd expect to see the slope change up tomorrow.

June 1:  12:10pm

Signal weight -1000, the Change -15.  A bar ago signal weight became weakly positive.  A few more hours at this signal weight level and the Change will be positive.  Notice the very large volume spike at 108.80+-?  This is an important price level and should provide support provided signal weight isn't -2000.

June 1:  10:10am

Signal weight -947, the Change -10.  The opening gap has been filled and signal weight is much less negative.  Aggressive users should still be looking to buy into new lows when we're nearer to the conclusion of the current down cycle on the Primary.  The Primary is still high at +5935; we should expect to see it in negative numbers before a slope change up.  The trading model is flat having achieved its target at the open.

June 1:  Opening Read

Signal weight has opened strongly negative at -1605, the Change -54.  The trading model's profit target was exceeded on the open at 108.35, however, users could have easily covered the short prior to the opening at 108+-.  Price has traded into the gap that I identified in Friday's closing read.  We need to watch and observe the balance of this down cycle with respect to the average signal weight.  

June 1:  Pre Opening

SPY is trading at 108.01 at 9:13am, 50 cents better than the target price.  The model will take the open as the exit price.

May 28:  Closing Read

Signal weight spent most of the day between -750 and -1350.  A slope change down was confirmed at 12:30 and an enter short confirmed at 1pm at SPY 109.53.  The model is short SPY at 109.53 with a gtc exit at 108.53.  The Primary is at +6896 with room to fall.  There's an obvious downside gap at 108.79 to 107.70 and we should expect to see price move into this area.

But the big point is what's going on with the Secondary.  If we're about to see an origination of a new up cycle on the Secondary, then we need to be cognizant of the signal weight required to not only turn it up, but move it above +70.  Hence, given we are about to see an up cycle on the Secondary, we will want to buy into the current decline and position ourselves by the time the Primary can turn up.

Over the last two weeks, we've seen signal weight in the +-2000 area frequently.  And as I have previously stated, we should expect to see this during periods of higher volatility.  So, if signal weight is just moderately negative for the balance of the current cycle, then we'll see further positive divergence in the Secondary indicating we are going to see the Secondary turn up.  Price will follow.

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