What is Balance Trading Blog?
Balance Trading Blog is my trading notebook. It's a place for me to record my thoughts, ideas, and long-term (weeks to months) trades. I'm sharing it with anyone who cares to read it. Please kindly note that my notes, thoughts, and ideas are not trading recommendations or investment advice. They are simply notes, thoughts, and observations of an x-aerospace engineer who changed his career in 1997 and became a full-time trader who trades for a living.
What is SGS?
SGS is a proprietary mathematical long-term (weeks to months) trend following market timer. SGS is not a price-based timer. It is a smoothed and normalized aggregate of the number of new highs minus the number of new lows of a pool of around 4000 liquid stocks and ETF's (traded on NYSE and NASDAQ) for five discrete time periods (daily, weekly, monthly, quarterly, and yearly).
Everyday shortly after close, a new value for SGS is calculated. In order to reduce whipsaws, only the value of SGS calculated on a Friday is used to determine the status of SGS. If the Friday value of SGS is greater than zero, then the status of SGS is LONG. If less -200, then the status of SGS is SHORT. For any SGS value between zero and -200, the status of SGS is NEUTRAL.
What is SGS-ST (short-term)?
SGS-ST is a proprietary mathematical short-term (hours to days) trend following market timer. Similar to SGS, SGS-ST status can be long, short, or neutral. Additionally, SGS-ST could change its status from long to neutral if an overbought condition is triggered or change its status from short to neutral if an oversold condition is triggered.
The status of SGS-ST is determined by (1) the size of the total area between between 13 hourly EMA and 20 hourly SMA of SPX measured in price-time; and (2) by the growth rate of that area measured in price-time per hour. The value of SGS-ST is calculated every trading hour during the regular session (9:30 AM to 4:00 PM). The status of SGS-ST is determined by its hourly calculated value.
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