Sunday, October 29, 2017

Volatility Returns

SGS  Market Timer Status:  LONG 
LONG as of the close of September 8, 2017
SGS is a Long-Term (weeks to months) Timer
Why Market Timing Is A Must


SGS has been putting in lower lows since the beginning of October as major indices have been putting in higher highs.  This type of divergence is not promising but backtesting has clearly shown that so long as SGS remains above 50 the bull run is intact and significant (3% or higher) dips should be bought.


In the last five or six months, as shown in the chart above, VIX has been trading at low levels that have not been seen since late 2006 and early 2007. Chances are high that VIX starts to elevate in the next 12 to 18 months as one political crisis follows another both nationally and internationally.

We likely would see a substantial rise in VIX if Democrats win in the upcoming elections in Virginia and Alabama.  Republicans are planning to jam Trump tax cut through as soon as possible.  If they are successful we would see major indices go substantially higher but a Democratic win in Virginia or even a close loss in Alabama would be a major set back for the Republican's tax legislation plan.


As shown above, SPX and other indices have been trading a very well-formed rising weekly price channel.  The bull market is intact.

My Plan


SPY is moving higher in a well-established price channel on its daily chart shown above. Per my plan, I opened my first of three long positions in SPY last Monday.  A little bit of bad timing on my part as SPY dropped to the bottom of its price channel by Wednesday but I know from experience that trying to be perfect in trading is nothing short of a fool's errand.

My plan is to open my 2nd long position in SSO (2X SPY) on a 3% or higher pull back, hopefully sometime soon.


SPX: S&P 500 Index    SMA: Simple Moving Average
DJI: Dow Jones Industrial Index    EMA: Exponential Moving Average
DJT: Dow Jones Transportation Index    PDL: Primary Downtrend Line
NAZ: NASDAQ Composite Index    PUL: Primary Uptrend Line
RUT: Russell 2000 Index    ASL: Active Support Line
OEX: S&P 100 Index    ARL: Active Resistance Line
NDX: NASDAQ 100 Index    DTL: Dynamic Trend Line   
TUL: Tentative Uptrend Line   TDL: Tentative Downtrend Line
TLR: Trend Line Resistance   TLS: Trend Line Support

Disclaimer: The views expressed are provided for informational purposes only and should not be construed in any way as investment advice or recommendation.  Furthermore, the opinions expressed may change without notice.
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Sunday, October 22, 2017

Indices Are Heading Much Higher

SGS  Market Timer Status:  LONG 
LONG as of the close of September 8, 2017
SGS is a Long-Term (weeks to months) Timer
Why Market Timing Is A Must


On Friday SGS bucks its declining trend and headed higher, confirming the rally in all major indices.  With SGS above 50 and the market entering into a seasonally bullish period, chances of a significant correction is slim to none.


Q3 earnings and outlook have been pretty good.  Chances are high that SPX continues going higher in its well-formed price channel as shown on the weekly chart above. 

My Plan


Last Thursday SPY opened below its ASL and sold off to test its DTL shortly after the open. Then, SPY rallied and closed well above its ASL.  On Friday, SPY continued its rally and closed well above its ARL.  The rally on Friday and where SPY closed was significant because it rendered the bearish rising wedge and flag price formation invalid.

At this point, chances are high that indices continue their rally for the rest of the year.  My plan is to open my first (in SPY) of three long positions sometime Monday morning.


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SPX: S&P 500 Index    SMA: Simple Moving Average
DJI: Dow Jones Industrial Index    EMA: Exponential Moving Average
DJT: Dow Jones Transportation Index    PDL: Primary Downtrend Line
NAZ: NASDAQ Composite Index    PUL: Primary Uptrend Line
RUT: Russell 2000 Index    ASL: Active Support Line
OEX: S&P 100 Index    ARL: Active Resistance Line
NDX: NASDAQ 100 Index    DTL: Dynamic Trend Line   
TUL: Tentative Uptrend Line   TDL: Tentative Downtrend Line
TLR: Trend Line Resistance   TLS: Trend Line Support

Disclaimer: The views expressed are provided for informational purposes only and should not be construed in any way as investment advice or recommendation.  Furthermore, the opinions expressed may change without notice.
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Sunday, October 15, 2017

Indices Are Overbought, A Pullback Is Coming

SGS  Market Timer Status:   LONG 
LONG as of the close of September 8, 2017
SGS is a Long-Term (weeks to months) Timer


SGS declined all week, except for Friday.  Indices are overbought and chances of a pullback are high.


Again, Q3 Earnings and outlook set the path forward for the rest of the year.  Barring any major surprises, indices very likely continue their move substantially higher.  Pullbacks from overbought condition should be bought.

My Plan

I'm still waiting for an opportunity to open my first (in SPY) long position of three.  Hopefully, this coming week.


twitter
info@balancetrading.org

SPX: S&P 500 Index    SMA: Simple Moving Average
DJI: Dow Jones Industrial Index    EMA: Exponential Moving Average
DJT: Dow Jones Transportation Index    PDL: Primary Downtrend Line
NAZ: NASDAQ Composite Index    PUL: Primary Uptrend Line
RUT: Russell 2000 Index    ASL: Active Support Line
OEX: S&P 100 Index    ARL: Active Resistance Line
NDX: NASDAQ 100 Index    DTL: Dynamic Trend Line   
TUL: Tentative Uptrend Line   TDL: Tentative Downtrend Line
TLR: Trend Line Resistance   TLS: Trend Line Support

Disclaimer: The views expressed are provided for informational purposes only and should not be construed in any way as investment advice or recommendation.  Furthermore, the opinions expressed may change without notice.
on

Sunday, October 8, 2017

Why Market Timing Is A Must

SGS  Market Timer Status:   LONG 
LONG as of the close of September 8, 2017
SGS is a Long-Term (weeks to months) Timer


 I time the market, I have been doing that for the last 20 years.  Why I time the market is clearly shown on the semi-log chart above that depicts the entire 55-year history of S&P 500.

$10,000 invested in S&P 500 55 years ago, would have been $325,867 on Sep 29, 2017 but the investor would have had to stomach more than 50% losses at least four times during that period.  Nearly all investors would have bailed at or near the bottom of those crashes.  More tragically, most investors would not have participated in the rally following each crash.

If the same investor had employed a timing system, investment results would have been substantially different as shown below:
  • No Timing (Buy and Hold): $10,000 in 55 years compounding at 6.6% and would have become $325,867.

  • Simple Timing: Exit early as a major correction (20% or more) starts with only 8% loss of accumulated amount.  $10,000 in 55 years would have compounded at 9.3% and would have become $1,330,788.

  • Advanced Timing: Short major corrections (20% and more) with 6% loss prior to shorting and a gain of 60% of each correction. $10,000 in 55 years would have compounded at 14.4% and would have become $15,579,111.
So what is an advanced market timer?  It is a trend-following timer with an optimized lag time with a minimized number of whipsaw.  Earlier this year I developed a new market timer that has those two required characteristics optimized by extensive back-testing.  I have been using the new timer in the last couple of months to time the market.


SGS advanced higher every day last week but on Friday it declined slightly, signaling a possible sell-off of this coming week. 


Q3 Earnings and outlook set the path forward for the rest of the year.  Barring any major surprises, indices very likely continue their move substantially higher.

My Plan

I'm still waiting for an opportunity to open my first (in SPY) long position of three.


twitter
info@balancetrading.org

SPX: S&P 500 Index    SMA: Simple Moving Average
DJI: Dow Jones Industrial Index    EMA: Exponential Moving Average
DJT: Dow Jones Transportation Index    PDL: Primary Downtrend Line
NAZ: NASDAQ Composite Index    PUL: Primary Uptrend Line
RUT: Russell 2000 Index    ASL: Active Support Line
OEX: S&P 100 Index    ARL: Active Resistance Line
NDX: NASDAQ 100 Index    DTL: Dynamic Trend Line   
TUL: Tentative Uptrend Line   TDL: Tentative Downtrend Line
TLR: Trend Line Resistance   TLS: Trend Line Support

Disclaimer: The views expressed are provided for informational purposes only and should not be construed in any way as investment advice or recommendation.  Furthermore, the opinions expressed may change without notice.
on

Monday, October 2, 2017

Indices Look Good

SGS  Market Timer Status:   LONG 
LONG as of the close of September 8, 2017
SGS is a Long-Term (weeks to months) Timer

Another busy weekend and I had no time to prepare charts and do my weekly analysis.  

My Plan

I didn't open any long position last week.  My plan is to open my first of three long positions sometime this coming week. I'm planning to buy SPY.


SPX: S&P 500 Index    SMA: Simple Moving Average
DJI: Dow Jones Industrial Index    EMA: Exponential Moving Average
DJT: Dow Jones Transportation Index    PDL: Primary Downtrend Line
NAZ: NASDAQ Composite Index    PUL: Primary Uptrend Line
RUT: Russell 2000 Index    ASL: Active Support Line
OEX: S&P 100 Index    ARL: Active Resistance Line
NDX: NASDAQ 100 Index    DTL: Dynamic Trend Line   
TUL: Tentative Uptrend Line   TDL: Tentative Downtrend Line
TLR: Trend Line Resistance   TLS: Trend Line Support

Disclaimer: The views expressed are provided for informational purposes only and should not be construed in any way as investment advice or recommendation.  Furthermore, the opinions expressed may change without notice.
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