UUP follow-up

UUP 5 minute

US Dollar: 5 minute trend

Below a 5-minute chart of the UUP, the ETF for the US Dollar. 

I think this is important and has direct ramifications for the US Stock market.

UUP 5 minute

For subscribers only

FXP was $220 in October, 2008.  Below is the first Weekly BUY SIGNAL since then.  Govern yourselves accordingly.

FXP Weekly

Tutorial

Below a Daily chart of AT&T.  Note six trades, of which only three were very profitable. Look deeper.  Two periods of congestion, whipsaws, back-to-back reversals.  Each time was followed by long, profitable trends that lasted weeks. 

T Daily

This the core strategy of my Trend Following Models and it applies to every time frame.  Get this concept down and these models will be very good to you.

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A wonder to behold

Through February 10, EWI is offering free access to their Forex and Currency forecasts.  Although I am fairly new to currency trading, I am familiar with the work of Jim Martens, Senior Currency Analyst at EWI and believe he is one of the most skilled and effective analysts at EWI, second only to Robert Prechter himself.  His educational videos available at EWI are some of the very best tutorials on Elliott Wave I have ever seen.   In other words, whether you trade currencies or not, Martens' work is well worth the time and/or commitment needed to better understand EW analysis and in particular the opportunities that are being presented this year across global financial markets.


The chart below is from Martens' end of day analysis this past Friday. Accompanying the chart within the service is a video by Martens in which he discusses the pattern of a third wave appearing in both the Euro and US Dollar (opposite third waves, Euro-Down and US Dollar-Up). Although the video covers current patterns in the currencies, perhaps more on point it is a description of the mindset needed to exploit the opportunities presented by imminent third waves.  That is exactly what Robert Prechter is suggesting (more like banging the table) is happening right here, right now in global stock markets.  As evidence mounts that he is correct in this assessment, this video hammers home how investors and traders can and should take advantage of a rare and wonderful wonder to behold.

It is an important video, but the only way to see it is to log into the week of free access being offered by EWI.

When logged in, look for:

Dear Subscribers, let's talk some simple concepts: Third waves. Did we just see one in the EUR/USD? Watch my weekly video for details (Feb. 05, 2010). -- Jim Martens, Senior Currency Strategist.

Simple Concepts: Third Waves (Feb. 05, 2010)

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You can't always get what you want...

...but if you try sometimes, you just might find, you get what you need. 
   -Mick Jagger and Keith Richards, 1969, Let It Bleed

My preference would be that any trading system be perfect, triggering Buys at low tick and Sells at top tick.  Early in my trading career, I spent (read: wasted) what seems like an eternity researching and developing such systems.  Not to mention the thousands of dollars pissed away trading top ticks and bottom ticks.  Somewhere along my maturation-of-a-trader continuum  I went 180 degrees the other way, discovering that all a trader needed was an edge, an effective edge, the proverbial "something that works" and all of my research, development and system design efforts were now focused not on perfection, but on the much less elusive concept of advantage.

SPX Daily Trend Model

The above chart represents what I am suggesting is the greatest advantage I have seen in my years as a trader and system developer.  It is not perfect.  But is good.  Damn good.  The solid navy line illustrated in the above chart is my Trend Following Trading System.  It works across any tradable and any time frame.  It generally is about 60% accurate, meaning 40% of its signals are reversed before generating profits.  But of the 60% that are profitable, the profits not only compensate for the 40% of trades that lose, but they go on to produce out-sized gains against any measure of market performance.  

Counting from the left of the chart, there are four trades on the chart, it begins with an ongoing Long (Nov 6 @ 1067), then Short (Jan 21@ 1133) then Long ( Feb 2 @ 1100) and finally Short (Feb 4 @ 1077).  That works out to 3 out of 4 winning position trades for a sum of 87 SPX points over the course of three months.   

That is a gain of 87 SPX points over a 90 day time frame where the SPX has gone down a total of one point.  That is an edge.  That is an advantage.  It's not perfect, it may not be everything we want as traders and/or investors, but I am telling you loud and clear that it is all that is needed to achieve success in trading in 2010 and beyond.  

SILVER

SLV Monthly

The monthly trend models are way too slow to be very effective, but they do give a great big picture view of mega-trends.  I sold my SLV positions this week because of the Weekly Model, which seems to have exited it's congestion with a definitive thrust down:

SLV Weekly

The trade was entered back in late 2008, before I had started using these trend models, somewhere just under $10.  But the trend models were warning of a change in trend for the past several weeks, since the end of December and last week seemed to put an exclamation point on the end of the bullish trend in Silver.

As a trading vehicle, have a look at the Silver Daily Trend Model, with the most recent Daily Trend Signals annotated on the chart:

SLV Daily Trend Model

I'm working on a Weekend Update for the email list, should be out later today or tomorrow at the latest.  In the meantime, some added emphasis to the title and theme of this blog from a some old friends, below.

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SPX Hourly Trend Model

SPX Hourly Trend Model with Vortex Indicator

Note to Subscribers:

This has been a great trade and it appears to be holding into the last two hours of trading.  The Long Trigger remains at the level indicated in the last email update. 

TZA Daily Model Trade Analysis

Below is my TZA Daily Trend Model.  There have been a lot of questions about how best to trade these models and the truth is, there is no one right way to trade these models.  There are several alternatives, three of them suggested beneath the chart.

TZA Daily Trend Model

BUY SIGNAL: January 21, 2010 @ 9.32

Current Price: 11.38

Return:       22.1%

BUY at End-of-Day Jan 21st @ 9.46

Return:   20.3%

BUY at NEXT OPEN Jan 22nd @ 9.51

Return:  19.7%

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US Dollar vs. GLD

UUP Weekly

GLD Weekly

As the above Weekly charts suggest, something major has changed and what we are seeing across global financial markets may very well be directly correlated to this big picture turn.

SPX Trend Models

Hourly

Daily

Weekly

For the benefit of those following the Trend Models through my email service, here are the SPX charts for relevant time frames. The price levels are as they were in the last email update.  Note that the Daily Model is now "Pending" and will trigger if it closes as it is now trading, under the Daily SELL level.

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