Holding Steady

With the negative open today, I refrained from opening any new trades today. My short-term model is pointing to potentially better entry points around the third week in May. So rather than going in all at once, I'm looking for opportunities to scale in with the objective of being fully invested in a few weeks.

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!!