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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Tuesday, June 30, 2015

OK, Now What?

As planned, I took more off the table when the S&P broke 2071. More precisely, I sold the Russel 3000 at S&P 2074. By doing so, my equity position is now less than 50%. My trading system normally calls for an equity allocation of 50% under current circumstances, but I'll admit that my emotions together with an anticipation of further macro deterioration, have gotten the best of me and as a result, my equity level is more like 33%. Normally, I would feel uncomfortable with such a low equity allocation, but given that most of my selling occurred when the S&P was at 2100 makes me feel as though I wouldn't miss out -- if the market takes off from here. The difficulty at this point is making the right moves without knowing what my macro indicator will ultimately do. Thus, I'm more inclined to withhold from further selling and ride it out until I know more. With the market near the 200 day moving average, the S&P could bounce here, but my short-term indicator appears as though it will not signal a "buy" until mid-July. So if you've been reading my blog, you know that it's possible that a top might be forming and that a top might occur in August. So the challenge is whether to buy into any rallies or to sell into it. At this point, I'm still thinking that the market will rally into August but I don't think that adding to my equity position is worth the risk. Given that the market dipped below 2070, I wouldn't even consider buying unless the S&P crossed back up over 2115 which corresponds to the current trailing ATR3 stop. Hopefully, by then, my macro indicator will give me guidance to either sell or jump back in.