BIDU

BIDU Weekly Trend Model

BIDU is one of the stocks that is followed in my private email subscription service.  The above Weekly Trend Model is why.  It reversed LONG the first week in March, 2009 @ 17.26 and is up 356% in 18 months.  As the chart suggests, a weekly close below 73.50 will reverse the model to SHORT.  A weekly close below 73.50 will also break the double bottom formation put in over the past two weeks at 76.00.

BIDU is also worth watching as a bellwether for NASDAQ, the Technology sector and China.  In other words, this is one to keep an eye on for lots of good reasons. 

Past performance is not a guarantee of future results.

US Dollar - UUP

I continue to like the US Dollar trending models and in particular, the UUP Daily Trend Model:

UUP Daily Trend Model

I'm not going to even pretend to know what global financial currents affect currency trends, but I can recognize a well trending trading vehicle when I see it and this one speaks for itself.  Looking at the recent historical performance of this trading model, it appears that about 2 out of 3 trend signals work for gains of between 5-10%, while the losers drop maybe 2% before getting stopped and reversed.  

For what it is worth Prechter is very bullish on the US Dollar, suggesting a surge higher in the coming months.  The above trend model isn't so prescient, suggesting only that the trend is up and that should be good enough for now.  

It is.

A

Far away from now

Won't you look down upon me, Jesus
You've got to help me make a stand
You've just got to see me through another day
My body's aching and my time is at hand
And I won't make it any other way

I've seen fire and I've seen rain
I've seen sunny days that I thought would never end
I've seen lonely times when I could not find a friend
But I always thought that I'd see you again

Funny, isn't it?  Looking back at all of the people that have crossed paths with us in our lifetimes, how many of them disappeared from our lives entirely, never to see them again? At the time we last were together, neither one of us knew that it was the last time.  The last time we would catch each others eyes,  the last time we would be sharing even a sliver of each other, a time, place and memory forever fixed, so final, finished, the closing chapter of a book too brief, a narrative so fleeting and it was gone before we could grieve.

A lover, an ex, a best friend, a parent, it doesn't really matter, does it?  Time closes all that we have been, whoever we were and whatever life we were living.  Relentless, dogged, unforgiving.

I went dancing last night.  My partner held me close and though the small dance floor was elbow to elbow and tush to tush, we stood alone, caught in an embrace that will live with us forever.  When will this one pass?  When will paths divert, our lives move on, or now, in these years, just end?

Who are you missing tonight?  A first friend, first love, first spouse, first wonderful taste of the sweetness that rained down from our first companion in intimacy?

I miss the girl on the dance floor last night.  Though just a few feet down a hallway, I miss the way she was with me last night, buoyed by tequila,  the loud music and crowded dance floor, we found a space and time where we stood alone, a forever moment to be remembered, then missed, one day far away from now.

Shorter term trends - Gold & Silver stocks

Back in early June I posted an analysis of Gold and select Gold & Silver stocks.  Below is my third recap of my Trend Following Trading System, this time Gold & Silver stocks.  There are three differences in these stocks from the previous two "Shorter term trends" installments.

First, for these stocks I use a lower volatility setting for the trend algorithm.  Gold and silver stocks trend much better with lower volatility thresholds.

Second, a few of the "Buy" signals in the table were generated before I sent out the Gold & Silver Basket to subscribers.  But I think its a better view of performance of the algorithm to see the signals from inception.  The basket of gold and silver stocks was sent out on June 19th, so all performance is real time since Monday, June 22nd.

Third,  I'm including the Weekly Signals because they have been so good that trading them should be a material consideration for anyone with a longer term time horizon.

Finally, as with the previous two installments, past performance is not a guarantee of future results and that the reversal thresholds do change so the reversal levels shown above are only applicable at the time of this post but are updated to my private email list after each market close.

Selected Charts

ANV_Daily Trend Model

ANV_Weekly Trend Model

AXU_Daily Trend Model

Shorter term trends - Stocks

Yesterday I posted the ETF performance table that I send out to my private email list after the close every day.  Today I am posting the Stocks table with current signals and performance. 

The Daily Signal represents the current signal and trend for each stock. The Entry Price represents the closing price of the stock on the day the signal was generated.  The Daily Reversal is the price level where the trend changes.  As with the yesterday's table,  reversal levels change daily, so please do not rely on the listed Daily Reversal levels.  The reversals are updated after the close every day and sent to subscribers.The color codes designate a certain feature of each stock's trend, again, proprietary and reserved for subscribers.  The Daily Returns represent the net percentage return from inception of the current trade.  Past performance is not a guarantee of future results. 

There are 21 winning signals against 3 losses.  Yesterday, the ETF table showed 19 wins and 0 losses.  These results should not come as any surprise, since the market has been in a down trend since August 9th.  Still, not a bad showing for a simple, objective, mechanical trading regimen.

Selected Charts

CME_Daily

GS_Daily

PCLN_Daily

Shorter term trends

Let's change the view from the big picture to the current trends with a look at the Daily ETF's  followed in the subscription service:

   The reversal levels change daily, so please do not rely on the above numbers.

Reversal levels are updated daily for subscribers.

Selected Charts

TYP_Daily

SCO_Daily

UUP_Daily

FAZ_Daily

Past performance is not a guarantee of future results

Market Collapse of Epic Proportions

Let's make the case with our biggest picture time frame, the SPX_Monthly Trend Model. This trend model reversed SHORT with the April-June decline in the market.  Note also that these monthly signals measure in years, not days, not weeks.  The implications are for a heck of a ride down in the months and perhaps years ahead.

 SPX_Monthly Trend Model

There are two Elliott Wave counts embedded on this chart.  The first one (blue)  is automatically applied by my Advanced GET software.  I have been using this software since 1994.  It works more often then it doesn't, I give it a lot of weight.  It represents the most bullish of the two EW counts, yet still projects a move to below 600 on the SPX, as is suggested by the horizontal blue support line in the lower right corner of the chart.

The second wave count (black) is from Robert Prechter, the controversial EW analyst that EW wannabes love to disparage because of his missing calls in the past.  They ignore his body of work which is staggering in its prescient analysis and observations of not just the stock market, not just the economy, but in particular social mood as the driving engine of all things financial, in the evolution of society to some extent the rise and fall civilization itself.  

A little too sweeping?  Only if you believe the ignorant, snide snippets of opinion of him so rampant on the Internet.  Not if you read is seminal works,  Elliott Wave Principle: Key To Market Behavior and especially, the most important publication of last twenty years, Socionomics: The Science of History and Social Prediction.  There is no better Elliottician alive today.  We had better pay attention to his analysis, whether we agree with it or not.

All that said, I've placed  Prechter's Cycle degree wave count on the above monthly SPX chart, a completed Wave 1 (early 2009), a completed Wave 2 (April, 2010) and now the beginning of Wave 3 down.  From Prechter's  January, 2010, Elliott Wave Theorist:

The very center of the wave structure-the most volatile point in an impulse-should occur in 2010 when the market reaches wave iii of III of 3 of (3) of 3.  In a bull market, this point in the wave structure marks the time at which investors in the aggregate stop worrying about the downside risk and begin projecting ever-higher levels (for example, by writing books about stocks for the long run and Dow 100,000).  In a declining impulse wave, such as the market is in now, the same point marks the time at which investors in the aggregate stop focusing on the market's upside potential and start worrying about how far down it will go.  This is a very rare event at Cycle degree, and its upcoming occurrence will be stunning enough to set records for financial panic (Emphasis added).

Let's translate all of the above into some workable, tradable, ambitious strategies.  Below the Weekly and Daily SPX Trend Models:

SPX_Weekly Trend Model

 SPX_Daily Trend Model

The two most important characteristics of these trend models are first, the current dominant trends, which in these cases are both DOWN and second, each model includes a trend line that represents a reversal of the current trend.  In the case of a rally that extends, or in the event that these dominant trends are short-lived rather then the beginning of something massive, these trend lines will be broken to the upside and, "All bets (on the SHORT side) are off." 

I utilize these trend lines and trend models extensively in my subscription service, my private email list in which I give real time market observations and updated short-term trend model analysis.   On Thursday our SPX_60 and SPX_240 models reversed SHORT and captured most of Thursday's decline.  Our VXX_240 model has been LONG since August 11.  We use these short-term models for entries into the SHORT side in conjunction with the longer term Daily and Weekly SHORT trends in the SPX.  

There is no one strategy that fits all traders.  For some, simply buying an inverse ETF, such as the SDS, when the Weekly Trend Model went SHORT on May 3rd at SPX 1111 provides all the trading that is necessary to garner the most from an existing trend.  For others, the Daily Models provide more active entries and exits.  Finally, for the very short-term oriented traders, I update the 60 and 240 minute models in the SPX and QQQQ throughout the trading day.

I don't know what is going to happen next in the markets.  Monday, even next week, can go either way, as is always the case.  What these Trend Models of varying lengths do for me is assure me that the market isn't going to go too far in either direction without me.  That removes a lot of uncertainty from trading.  But even more significant, there is absolute assurance that if the above wave counts unfold as forecast that they will do so with me on board.   

With the Monthly, Weekly and Daily Trend Models all pointing down coincident with a compelling EW case of an imminent market collapse of epic proportions, a persusive case can made for being SHORT the market, right here, right now.


A

Energy Stocks

In keeping with our sector theme, below are some energy-related ideas across different time frames to illustrate how trends can make great swing trading vehicles regardless of time horizons. 

OXY_Weekly Trend Model

Occidental  Petroleum will always have a place in my heart.  It was the summer of 1978 and I was on vacation in Chilmark, Martha's Vineyard.  During a rare bout with sobriety I purchased some OXY options that  tripled in value in the ten days I was on holiday.  This was a time before personal computers, cell phones, or instant quotes, just me, a transistor radio on the nude beach, a dial-up phone at the cottage and a Merrill Lynch broker in Atlanta.  The birth of a career, a passion and a new found respect for lucidity even when all those around you are crumbling into chaos and debauchery.

SCO_Daily Trend Model

The investment will seek to replicate, net of expenses, twice the inverse daily performance of the Dow Jones AIG Crude Oil Sub-Index. 

Note the pattern of whips-saws followed by huge percentage gains.  Discipline and money management are all that need be added to this model.

 SCO_15 Trend Model

Although I don't presently trade this 15 minute model, the chart makes a compelling case for doing so.  

Market Notes 

I am not going to use the C word today, but the elements are building and I'll likely be going into a more detailed evaluation of the potential in my Weekend Update. 

Computer Stocks

Yesterday I highlighted three stocks from the financial sector.  Continuing with the sector theme, here are three stocks from the computer sector.  This time, let's look at the Weekly Trend Models:

DELL Weekly Trend Model

IBM Weekly Trend Model

HPQ Weekly Trend Model

The obvious question that arises is, "It can't be that easy, can it?"    

Past performance is not a guarantee of future results.  

Plus, the past three years have seen some rather large trends, which is exactly the kind of market that this technique is designed to navigate.  

Finally, note that all three of these stocks are in Weekly SELL modes. 

Market Notes

Today's sharp decline out of the gate was enough to turn all Intermediate Trend Models SHORT. Below is a Daily chart of the DJIA with a potential wave count.  Next key level is 9600.

Financial stocks

Here are a few financial stocks from my Trend Tables.  My thesis is that financial stocks lead the market, especially this market and when they all lead in the same direction we need to take note.

 GS_240 Trend Model

JPM_240 Trend Model

AIG_240 Trend Model

NNVC

Here is an updated NNVC_240 chart.  It really is too early to have much faith in the EW count shown, but I'm including it anyway, just in case it's right:

NNVC_240 Trend Model