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.



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Sunday, May 4, 2014

The Elusive Correction -- Time to Buy!!

What a disappointment -- the much desired correction didn't come. That's what I get for wanting something so badly. So what to do now? As I mentioned in earlier posts, my macro indicator is very positive from 5/14 onwards. Within the last couple of weeks, my short-term indicator flashed a buy (4/21) and the S&P a day later on the 22nd, broke a trailing ATR3 stop to the upside @ S&P 1878, thus signaling a positive trend. I didn't act on these two signals because we were still in the "Red" phase according to my macro indicator. However, given the impending macro "Green" phase (on 5/14), I've had to give those two signals more credence. As a result, I've decided to go all in and restore my equity positions to their fully invested level. For those of you trying to understand my approach, I score and weigh my signals and when the score hits certain levels, I act. The scoring components are: (1) a phase change in the macro indicator [1 point], (2) a weekly positive RSI divergence [1 point], (3) a break of a ATR3 trailing stop [1 point], and (4) a signal from my short-term indicator [0.5 point]. During a "Green" macro phase, I buy on 2 points. During a "Red" macro phase, I buy on 2.5 points. Right now, given that 5/14 is just around the corner, I consider that we're in the green -- the indicator is termed "macro" for a reason. Thus, the "2 point" rule has been satisfied. I don't see any significant risks for the next 12 months, so let's cross our fingers. Although, I reduced my equity position and sacrificed some gains in the last 3 months, this has been a lesson in risk management. After all, it's the gains you realize (keep) that count. Happy Investing!!