The purpose of this site is to share results of a trading system that I use for identifying both long-term and short-term trading opportunities. I take the time to do this because of my passion for investing and helping others succeed. The system helped me avoid the "Crash of 2007/2008" and every major correction since then. The cornerstone of my trading system are analyses of market liquidity to gauge longer-term market sentiment and equity and index options (put/call ratios) to identify short-term entry and exits.

This site is for information purposes only. Past performance of the trading system is not a guarantee of its future success. Please consider consulting a qualified investment adviser before making investment decisions.



Follow to Get Alerts on New Posts

Sunday, October 13, 2013

Well, it's all in

As it often happens, things don't pan out like you think they will -- particularly when politics dominates the market.  From a pure technical perspective, a positive RSI divergence was formed on Friday and on top of that, the market broke out above the trailing 3ATR stop.  Both of these "signals" warranted a 100% buy-in for core positions in my portfolios.  As mentioned in prior posts, my macro indicator has been positive since 9/18, so these recent events buoyed the case for being in equities.  For now, the next potentially tenuous period might be in late January when I see the chance for a correction.  However, that will be another buying opportunity for an upward leg into next fall.

Tuesday, October 1, 2013

Yes, I'm still here waiting

As I mentioned in my prior post, too much time transpired for a short-term top to form to pursue a short trade.  The macro indicators I follow will be trending up into next spring so I will only be trading on the long side.  So the next question is when to buy in.  Normally, I would look to a weekly divergence between price and the RSI.  This occurred in late June but not since.  Such a divergence would represent a strong buy signal and would prompt me to trade 100% to the long side. Second, I would look for a 3ATR reversal (a break above S&P 1676) as a fall back.  This occurred on September 10.  Under normal circumstances, that would have prompted me to trade 50% to the long side, however, my short-term indicators were flashing caution.  This short-term options-based indicator is now indicating that a buy signal might be generated around 10/16.  If by then the S&P is above 1676, I will trade 100% long; however, if only one of the two indicators is flashing a buy, I will only trade 50%.

Monday, September 9, 2013

My patience might pay off

So if the market's momentum persists, it's likely that my long-standing target of 1686 will be reached.  My options model isn't giving any clear signals but it is possible that it will generate a sell (short) signal in the next two weeks.  The options market is exhibiting very low put/call ratios -- a sign that the market is very exuberant.  If traders start to layer on puts, it won't take much to change the market's upward bias to the downside.  My only issue at this point is that my longer-term futures model is indicating that a bottom (if the market were to correct) is near.  Preferably, I would like to take any short positions soon while my macro-level indicator is still pointing downward.  Taking any shorts after say the 18th of September might entail greater than average risk.

Friday, August 23, 2013

Believe it or not, I'm still waiting

Still on the sidelines and still waiting.  As I indicated in my earlier post and in the sidebar, I expect the market to complete a correction in late September.  My short-term options model isn't alerting me to any imminent trades in either direction.  The only "promising" signal on the horizon could be a peak near mid-September. So the plan is to see if the market can rally up to a peak around this time period for a short trade, which could be the last opportunity before the market resumes its apparent long term up trend.

Wednesday, August 14, 2013

Short trade design

I'm a little disappointed that the market hasn't yet rallied to what I believe is the ideal shorting "zone" of 1720/1725.  If the top is already in, then a potential "next best" shorting level would be 1685/1710.  Using 1710 as the top, my revised Fibonacci analysis puts resistance at 1618/1624 -- this would be the first profit objective on a short trade and yield an acceptable 2.4 reward to risk ratio.  My short-term options model is still showing that a reversal or top could occur sometime between Aug 21 and Sept 5.  I'm just hoping that this trade develops so I can put it in play -- hoping that the bear train hasn't left the station without me.  All other criteria have been satisfied, including results of my futures analysis and poor (negative divergence) on the weekly RSI for the S&P 500.

Thursday, August 8, 2013

Patiently waiting for the top

The minor pullback we've experienced over the last week will likely prolong the topping process.  The equity and index options market is showing no signs of "worry", but rather euphoria.  Simulations of my options-based model indicate that the window for a top is more likely to be between 8/26 and 9/5.  This could change rapidly if the character of "bets" placed in the options market becomes more pessimistic.  I'm still looking for the market to push through prior resistance near 1709 to lure investors into the market before a top in the 1720/1725 region.

Thursday, August 1, 2013

Short trade on the horizon

I'm patiently waiting for my options model to signal the next top sometime in the next three weeks with August 21 being the best estimate.  According to my Fibonacci analysis, I anticipate a top between 1720/1725.  If the S&P achieves this level, price targets for a short trade would be 1658, then 1630, and 1606.  Using 1658, the reward/risk ratio would be 2.06.  More details to come.

Saturday, July 20, 2013

Update to 12 Month Outlook -- After the correction (archive)

The market corrected as predicted. The apparent strength to new highs should reverse again into mid-September. For short-term traders, I will be posting ideas for shorting this market in the upcoming weeks.

The uptrend beginning in September should persist until the end of January 2014 for an intermediate-term peak.  I then foresee a weak period between this January 2014 top until the end of February 2014.  A secondary top should form at the beginning of April after which I foresee a greater correction into mid-May.  The subsequent two months should exhibit strength.