Closing Read June 11, 2010

Primary Trend=UP

Number of days=1

1st target level = 111.10

2nd target level = 113.61

3rd target level = 115.91

PM Update June 11:  The Secondary closed at +136, up 69 ticks.  A new up cycle has been identified.  I have identified 3 initial upside target levels shown above.  This cycle should last 4-6 weeks and has the potential to recover to the April highs.

AM Update June 11:  Negative signal weight of -1280 turns the Secondary's slope down today.  At the open, the Slope has turned down.  +300 signal weight or more at the close will move the Secondary past +75 and identify a new up cycle.

PM Update June 10:  The Secondary changed slope up today, closing at +66.  +75 is needed to establish a new up cycle.

AM Update June 10:  The Secondary has turned up again today as +980 signal weight is needed.  A slope of +75 is required to confirm a new up cycle.

PM Update June 9:  The Secondary spent most of the day positive sloped, but as the close was still down as signal weight declined below +1380 during the last hour.  Positive divergence continues.

AM Update June 9:  The Secondary has turned up as +1380 signal weight is needed to do so.

PM Update June 8:  The Secondary lost 57 ticks to -89.  

AM Update June 8:  The Secondary is losing 96 ticks to -50.  +2400 signal weight is needed to turn the Secondary up.  Positive divergence continues.

PM Update June 7:  The Secondary gained 55 ticks to -150 as the down cycle on the Secondary resumed after changing slope for 1 day.  Additional downside targets are 104.30, 100.56 and 95.08. (expand your Secondary chart to 300 days, turn off the Fast, turn on volume at price, look for obvious large bars and chevrons).

AM Update June 7:  The Secondary is losing 29 ticks to -65.  +1520 signal weight is needed to turn the Secondary up today.

June 11:  Closing Read

The slope change signal confirmed at 1pm as expected.  However, signal weight never got very negative after the slope change.   By the 3pm bar, the Change was in single digits, signal weight reversed and got strongly positive closing at +1442, the Change +49, TTXSlope=2 bars.

This reversal in signal weight is consistent with the new up cycle that has been identified by the Secondary that we have been expecting.  We can now clearly see that the 'tide has turned' as has been predicted by the positive divergence that has been showing on the Secondary for the past two weeks.

Next week, we should see the Primary complete its down cycle.  However, as I have seen in previous originations of new cycles on the Secondary, the Primary can get stretched initially to larger extremes.  If it turns back up from +8000, it should close the gap at 110.73 then achieve the first target level at 111.10. (more in Advanced)

June 11:  12:30pm  Early Exit Long/Early Slope Change Down Signal Issued

The early exit/early slope change signal has issued and it will confirm if signal weight is less than +100, otherwise the following bar.  The Primary is at +9500+ so a full cycle this time and during an up cycle.

That's it for me for today folks, the first tee beckons.  I'll post comments later this evening. Enjoy the weekend. 

June 11:  11:04am

Signal weight has again moderated as we would expect at this point in the cycle.  +54, the Change -83 and TTXSlope=2.3 bars, faster of course when signal weight turns more negative.  Observing the signal weight today has told us that the propensity of it to be more positive than negative, as it has for the past week, continues.  Switch to your Secondary chart, turn off the Delineators so you can see the price action and start identifying upside targets.  Load in any of your favorite symbols and you can do the same with them as long as they correlate to the S&P.

June 11:  10:10am

Signal weight has now turned moderately positive at +862, the Change -64 and TTXSlope=6 bars.  The Secondary has a green dot on its line now indicating that it's trending now, but it will need to close at this level.  This up cycle on the Primary can go on for a bit more but it will turn down so initiating new positions now will violate the discipline obviously.

June 11:  10am

Signal weight has reversed, now -61, the Change -113, TTXSlope=3 bars.  The Secondary has turned back up and if signal weight closes at +300 or more, a new up cycle on the Secondary will be identified.  I am still expecting a slope change down today.

June 11:  Opening Read

Signal weight has opened -1479, the Change -197 and TTXSlope=2 bars at this level of signal weight.  -1280 signal weight turns the Secondary back down.  A short signal is possible today but it will not be taken by the 2010 model. 

June 10:  Closing Read

Signal weight held strongly positive levels all day, ending at +2313, the Change -6.  With the exception of a few bars late in the day yesterday, this is the first up cycle on the Primary that has been confirmed by the Slope of the Secondary for nearly a month.  

Price has reached 108.80 again.  Recall that 108.80 was support as shown on the Secondary chart; switch to your Secondary screen, set numbars to 300 and you can clearly see the big volume spike at 108.80.  It will need to be tested and hold for it to be turned back into support.  I would expect that this will play itself out over the next down cycle on the Primary unless signal weight opens +2000+ tomorrow and stays at that level all day, in which case it will happen a day later.

With the Change now negative, and the value of the Primary approaching over-extended levels, we know that any moderation in signal weight tomorrow will turn the Primary down.  As we did two weeks ago, and continue now, we must be aware of the relative levels of signal weight during the next down cycle.  We should continue to use weakness to position for the Secondary's new up cycle that I believe will be identified very soon.  

 June 10:  2:40pm

Signal weight maintaining strongly positive levels, the Change now -8 and has been negative for several bars.  The Primary has reached +7000 and will rise further as the Slope value is +581.

June 10:   12pm

Signal weight continues extremely positive at +2278, the Change getting weak now at +10.  We have both upside and downside gap targets at 109.39-110.30 (up) and 106.53 (down).  With the Slope now near its maximum, we can expect to see the Primary reach at least +8000 on this cycle.

June 10:  10am

Signal weight extremely positive at +2407, the Change +43.  All of the SPY Accumulators are showing selling this morning, or more volume on downticks than upticks.  Big gaps bring out this behavior.  As with recent Primary cycles, we should expect to see price hold its levels until the Change gets near zero.

June 10:  9:45am

The positive divergence pattern seen above on the Secondary chart continues.  Notice how the orange line, the Change, continues in an upward pattern while price tests the lows.  This is good and indicates that we should continue to buy into any test of the recent lows.  Given the fact that the Primary is already well into its up cycle, we will have another opportunity to position longs during the next down cycle on the Primary.

June 10:  Opening Read

Signal weight has opened very strongly positive as the up cycle on the Primary continues.  The Secondary has turned up again as +980 signal weight is needed to do so.  

June 9:  Closing Read

Signal weight held very strongly positive levels until the 3pm bar, closing at +40, the Change -73 and the up cycle on the Primary out of confirmation.  Signal weight will need to open strongly positive tomorrow otherwise this cycle will end by mid day and another short signal is possible as well.  (The enter long signal did achieve its profit target during the 11:30 am bar.)

June 9:  10am

The long signal has confirmed at 107.19 as signal weight has remained above +1380.  Signal weight +1600, the Change +95

UPDATE:  10:20.  Signal weight +1521, the Change +75.  I'm out for the rest of the day.  I'll update after the close as I have an appointment on the first tee.

June 9:  Opening Read   Early Enter Long Signal Issued

+1380 signal weight turns the Secondary up today.  At the open, signal weight is +1734 and an early enter long signal has issued that will be ignored by the 2010 trading model.  More aggressive users may want to consider taking this signal.  The model won't be taking it because the Secondary, while now up, is not yet trending.  If signal weight moves below +1380, a long signal will come out of confirmation.

June 8:  Closing Read

Today was a good day to see that not all slope changes are equal.  The good ones are those that occur, then are impossible to reverse in the same day.  Today, we had multiple slope changes that could easily change again.  This is key...when they cannot change slope again for at least a day, that's when trading in the direction of the Primary is assured.  When they can change slope easily again, then there really hasn't been a true change of trend at all, has there?  Trading is more risky.

At the close, we held the slope change up on signal weight of +613.  However, -1000+- signal weight in the morning will turn it down again.  It is somewhat interesting to see SPY up 1% on signal weight of +600.  Makes me think most of the activity was in the higher weighted S&P issues.  (10% of the 500 issues represent 85%+- of the index.)

June 8:  3pm  Slope Change Up Confirms...but...

Here we go again.  -680 turns it back down.

June 8:  2:30  Early Slope Change Up

The Slope ended the last bar at ZERO!  At the moment, it's up and we're technically under an early slope change up signal as signal weight has once again reversed.

June 8:  2pm  Slope Change Down Confirms...but...

There's another slope change and I'd bet 50 cents we get another one later as well as -300 turns it back up again.  I am seeing very thin trading in a lot of securities, very thin.  I think this is why signal weight has moved around so much today.  Look at X for example between 1-1:30pm...look how little volume took it from the highs to nearly back to the lows in 30 minutes.  So, from here we could get a slope change up or an early enter short signal.

June 8:  1:30pm  Slope Change Up Confirms....but...

The Slope change has confined but signal weight continues to trend more negative than positive.  The Primary can still go in either direction given the fact that the Slope and Change are essentially zero.  Given the down cycle on the Secondary, we must expect that trend to continue to influence the Primary as its value is only -5484 and has room still on the downside.  Unless signal weight becomes positive, we can easily get a slope change back down.

UPDATE:  1:32...I didn't even get the posting finished before signal weight again turned negative enough to turn the Primary back down.  Be agnostic today.

June 8:  1pm  Early Slope Change Up Signal Issued

The early slope change signal has issued and it will confirm at 1:30pm if signal weight is less than -520.  Signal weight is weakly positive at +187 at this posting.  Price will need to rise above 106.60 to get anywhere on the upside as long as signal weight is so weak.

June 8:  12pm

Signal weight reversed yet again, now -1.  +360 signal weight turns the Primary up this bar, otherwise, unless signal weight reverses yet again, we should see an early slope change up signal within an hour.

June 8:  10:30am

Signal weight now -347, the Change +21 and TTXSlope=4 bars.  Signal weight has ranged between +1500 and -850 so far today.  The X and SPY accumulators are showing some buying at the present time but it's still a waiting game here.  If we take out the lows we should expect to see signal weight become more negative.

June 8:  10am

Signal weight now -158, the Change +37, the Primary -5170.  I'm still expecting to see a slope change up today.

June 8:  9:50am

Signal weight has reversed.  Now -194 and TTXSlope=3 bars.

June 8:  Opening Read

Signal weight has opened +1513, the Change +119and TTXSlope=next bar.  No long signal is expected as it will take +2400 signal weight to turn the Secondary up.  

June 7:  Closing Read

Signal weight began to expand down as the Change went negative during the 3pm bar.  As soon as the lows were taken out, signal weight expanded further closing at -1477, the Change -36.  Because the Primary flattened mid day, it can change slope up within an hour if signal weight reverses; and it can continue slowly lower if the trend maintains.  Until the Primary becomes overextended, price will continue to resolve in the direction of the Primary.  There are new downside targets identified in the section above.

June 7:  2:40pm

The Change is now +7 and about to go negative.  Signal weight is -501 and price nearing the lows of the day.  The Primary is only -4744 and has room on the downside.  Unless signal weight turns positive shortly, we can expect a break of the lows.

June 7:  11:30am

Signal weight -490, the Change +45 and the Primary's at -4071.  Unless signal weight turns strongly positive again, I'm frankly expecting more negative action until the Primary reaches -8000+-.  

June 7:  10:14am

Signal weight now +1165, the Change +160 and TTXSlope=3 bars at this level of signal weight.  +1520 turns the Secondary up as you can see in your Stats window.  

June 7:  Opening Read

After 12 minutes, signal weight is -194, the Change +110.  Not much volume between 107 and 105 showing on the chart.  With the Primary at -2586, there's still plenty of room on the downside for it to fall.

June 6:  Pre Opening Comment

At the beginning of last week I said:

"...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."

On Friday, -680 signal weight on the close would have been enough to turn the Secondary up, and hence it would be fairly easy for it to go past +75 and originate a new up trend.  The fact that signal weight opened negative and price collapsed doesn't negate the validity of using our tools to anticipate a trend change.

At any rate, back to the position of the Secondary and what we can expect in the coming weeks.  I have learned to trust divergences as they develop.  As we saw during the previous up cycle on the Secondary, divergence can go on for some time.  But at the end of the day, price always trades back at least to the level where the divergence began.

Unless driven by exogenous events resulting in forced liquidations, if we trade lower this coming week into the 104 area and the Primary is over-extended, we should buy into those lows for a reversal trade.  Volatility continues high so we should continue to expect wide ranges and reversals.  

If, on the other hand, the down cycle on the Secondary continues, driven by exogenous events, then 104, and 91.50 on SPY are additional targets.

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.

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