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PositiveDev's trading journey

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"IWM should drop by a larger %"

 

Yes, we could see that now

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I've sold the calls of my FXE straddle leaving just the puts. Are all markets going through a turn process right now? Reaction to the next Fed meeting may provide the answer.

 

It may be worth noting that IWM bottomed on 24th August, before either SPY or QQQQ. IWM is now giving indications of divergence away from SPY and QQQQ at this part of the rally;

 

Screenshot2010-10-27at193411.png

 

IWM in red, SPY in blue and QQQQ in green.

 

IWM also topped before the other two in both June and late July...

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I've been going through some daily timeframe charts using my TB indicator on various underlyings;

 

I'll be trading it on longer term timeframes from now on since I'm not around for the first part of the trading day for short term intraday ones, for some reason all the killer intraday ones seem to happen early on in the day, I can't comprehend why that may be. It's extremely intensive constantly cycling through intraday charts through huge lists of stocks for hours and hours looking for entries so I'm sticking to daily timeframe charts from here on in.

 

GS.png

 

This one here, Goldman Sachs, the double top formed before the close on 15/04/10, a double top being the signal to sell (once the second top has touched the level of the first one and turned around) the next day the price collapsed. That one I put more down to coincidence but the TB indicator still picked it out. I only wish I had this a long time ago. Main point to note is that a double top may again be forming, not quite there yet but perhaps in the next few days. The black line needs to move down and away from the red line, and not pass through it.

 

 

 

Screenshot2010-10-27at225646-1.png

 

This is DIA (ETF for Dow Jones Industrial Average). Again a double top is forming but not quite complete.

 

 

 

 

Screenshot2010-10-27at230159-1.png

 

Next up Sears Holdings Corporation (SHLD), a double top sell signal has been generated on that today.

 

 

 

 

Screenshot2010-10-27at230741-1.png

 

Next up Adobe (ADBE), double top not quite formed, perhaps in the next few days. Also highlighted two other examples where price trend and indicator trend diverge, only for the price to break towards the trend of the diverging indicator.

 

 

 

 

Screenshot2010-10-27at231231-1.png

 

This is USO, ETF for Crude oil, I'm just showing this as the previous entries were stunning points to go long or short, picked out again by TB.

 

 

 

 

Screenshot2010-10-27at231632-1.png

 

Here on FXA, interesting the buy signal was generated before the close on 1st September, highly correlated with equities of course. There were imprecise double tops in both January and April, wouldn't have been strong enough to warrant a trade but picked out the turns nonetheless.

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I checked the position of the top 100 in the S&P500 and the 100 that make up the NASDAQ to identify any other TB indicator double top sell signals.

 

Norfolk Sothern Corp (NSC) and Henry Shein Inc (HSIC) were identified yesterday as having given double top sell signals, I bought puts on NSC. I didn't get time to post the charts.

 

What I find potentially significant is that there are a high number of stocks where a TB double top will be formed if we get a general down day today.

 

IThe more that happen together may mean that a broader market sell off is more likely. The TB indicator looks like it's going to be given a strict test over the next few days.

 

I will post all of these new ones that are formed today, later on.

 

Sears Holdings Corporation (SHLD) suffered an approx 3% drop following the sell signal I gave on 27/10/10. I spotted it after the close therefore didn't have the opportunity to exploit that particular one.

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A double top sell signal has been generated on my proprietary TB indicator for SPY

 

Screenshot2010-10-29at195244.png

 

Although I've not shown the previous ones on this particular chart my indicator has picked out turning points before and it seems to work quite well. See if you can pick out the other times.

 

I need to run some serious statistics at the weekend to get a proper ratio but I think it could be as high as 7 or 8 times out of 10. The double top or bottom has to be either level, or very close to it, to be confirmed as a valid sell or buy signal.

 

A sell signal was already generated for IWM a few days ago. It's worth noting that previous sell signals have been very close to some form of top.

 

This is not 100% guaranteed (nothing is) however statistically it works to a relatively high degree, it's also worth noting that where it has given a sell signal before, sometimes it's taken a number of days of chopping around before the market moves down.

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Double top TB sell signals have been generated on the following stocks today;

 

Screenshot2010-10-29at220425.png

Vertex Pharmaceuticals (VRTX)

 

 

 

 

Screenshot2010-10-29at220210.png

AT&T (T)

 

 

 

 

Screenshot2010-10-29at220126.png

News Corporation (NWSA)

 

 

 

Screenshot2010-10-29at220024.png

Johnson & Johnson (JNJ)

 

 

 

 

Screenshot2010-10-29at215913.png

Dell (DELL)

 

 

 

Screenshot2010-10-29at231242.png

Cisco (CSCO)

 

 

 

 

Screenshot2010-10-29at215650.png

Chevron (CVX)

 

 

 

Screenshot2010-10-29at215538.png

Boeing (BA)

 

 

 

 

Screenshot2010-10-29at215401.png

Gilead Sciences (GILD)

 

 

 

Screenshot2010-10-29at224601.png

Dupont (DD), note I've highlighted a previous double top that did not work (at least not from the off, like previous examples in this thread) this previous double top has to be declared a failed signal since the stop would have had to be unrealistically wide, following the initial signal when price was 37.87, price moved as high as 40.12 before the move lower)

 

 

 

 

Screenshot2010-10-29at215156.png

Devon Energy (DVN) - EDIT, the sell signal was actually generated on 19/10/10 for this one, that was the day following the recent high

 

Yesterday's sell signals were Norfolk Southern Corp (NSC) and Henry Shein Inc (HSIC). NSC is 61.49 (+1.15%) today and HSIC is 56.15 (-4.21%) today.

 

Normally I would be taking these as shorts however since I have both IWM (Russell 2000 ETF) and SPY double top sell signals it makes more sense to use one of these. I doubled my short position on IWM today, if there is some form of fall or correction in the market IWM could fall by a great % since it outperformed the broader market on the way up.

 

I should note that there were some other borderline ones, I've left them out, since I want to stick with only the ones that conform to the absolute definition of a double top or double bottom. Needless to say I didn't find any double bottoms out of any of the S&P top 100 or NASDAQ 100 today (or yesterday for that matter).

 

There are a number of stocks where TB double tops may form next week, these are;

 

IBM not yet complete

MSFT not yet complete

ATVI not yet complete

LOGI not yet complete

MSFT not yet complete

RIMM not yet complete

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Typing error in post 30, two sentences from the end, it should read;

 

It's worth noting that previous sell signals have been very close to some form of top.

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SPY sell signal shaping up to be invalidated today (breach of double top)

Unless it breaks down sharply before the close

 

VRTX currently still a technical sell signal

AT&T sell signal currently invalidated

NWSA sell signal currently invalidated

JNJ sell signal currently invalidated

DELL currently still a technical sell signal

CSCO currently still a technical sell signal

CVX currently still a technical sell signal

BA currently still a technical sell signal

GILD sell signal currently invalidated

DD sell signal currently invalidated

 

IWM currently still a technical sell signal (unlikely to change before the close)

 

There was a double top short signal given on SPY at 5.54 pm

 

Screenshot2010-11-01at191849.png

 

Not taken as I'm short enough on IWM already, the sell point was right at an intraday high point - nice

 

EDIT - there seems to be some form of break down now so I'll re-assess signals again before the close

 

 

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At the close today;

 

SPY sell signal now invalidated

VRTX still a technical sell signal

AT&T sell signal now invalidated

NWSA sell signal now invalidated

JNJ sell signal now invalidated

DELL still a technical sell signal

CSCO still a technical sell signal

CVX still a technical sell signal

BA still a technical sell signal

GILD sell signal now invalidated

DD sell signal now invalidated

 

IWM remains a sell signal

 

 

Also, I'm watching GDX as there may be a potential double top forming;

 

Screenshot2010-11-01at200427.png

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I decided to take a look back to see how my TB indicator would have performed during some historic moments. Here is TB working on USO covering the period when Crude oil made it's all time high;

 

Screenshot2010-11-01at210149.png

 

TB indicator gave a sell signal on 14th July 2008, one day after it's all time high

 

There were no other sell signals, other than late October 2008 (not indicated), and no buy signals for the rest of the year

 

 

 

Here is the 2008 period for SPY

 

Screenshot2010-11-01at210809.png

 

TB indicator gave a sell signal on 9th June 2008 when the price closed at 129.18, that's 7 points below the high of the year, 136.36

 

 

 

United States Steel

 

Screenshot2010-11-01at213143.png

 

Sell signal on 30th June 2008 several points below it's all time closing high of 189.

 

 

I also looked back at the March 2009 lows for SPY, IWM, and QQQQ, however it did not catch the low in any of those cases, no signal was generated.

 

 

There is a huge sense of irony here for me, and that is, I have heard countless times that it isn't possible to pick tops and bottoms.

 

I hope in my continuation of this thread to prove that sometimes, it is.

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So far today

 

VRTX still a technical sell signal

DELL still a technical sell signal

CSCO still a technical sell signal

CVX still a technical sell signal

BA still a technical sell signal

 

The IWM sell signal looks like it will be invalidated by the close today, although there's not much in it at this point. I may close out half the position before the close.

 

EDIT - IWM sell signal invalidated - puts sold

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I'm doing a study of my indicator using the top 100 stocks in the S&P500 over the last year - the charts are located here

 

I counted a total of 185 buy or sell signals. 137 were correct, 48 were not. That works out at a 74% hit rate - not bad. I had originally thought it was 7 or 8 out of 10 so that fits with my initial feelings. When I have more time I'll do the NASDAQ and then maybe a range of sector ETFs too, to see how that works out. Following that I may look at my signals in combination with something else.

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Sell signal generated on TLT on Friday, only checked TLT today so didn't spot it at the time. I already have a long-dated position in TBT but added more puts today for a short term trade.

 

Screenshot2010-11-09at200705.png

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TB sell signals generated on the following today, I went through the S&P 100;

 

AA

AES

ALL

AEP

AXP

T

CL

CVS

GE

HON

INTC

JNJ

JPM

MS

ROK

TGT

UTX

 

That's 17 out of the top 100, quite a few.

 

I am away from home and unable to post charts right now.

 

A few days ago I got a sell signal on TLT, so bought calls on TBT. Now I also have a sell signal on LQD, the bond plot thickens.

 

Out of the above the most interesting candidates, from a technical standpoint, appear to be HON, JPM and UTX. I am already technically short JPM due to my physical silver position however if that story grows further the price could be in for a nose-dive, that may not happen so fast, that story may well drag on over time so I'll leave that for now. Honeywell looks vulnerable to a break downwards at this point, UTX perhaps also however the worst looking chart is most certainly LQD, it appears to be sitting on a previously significant support level.

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TB sell signals generated on the following today, I went through the S&P 100;

 

AA

AES

ALL

AEP

AXP

T

CL

CVS

GE

HON

INTC

JNJ

JPM

MS

ROK

TGT

UTX

 

That's 17 out of the top 100, quite a few.

 

I am away from home and unable to post charts right now.

 

A few days ago I got a sell signal on TLT, so bought calls on TBT. Now I also have a sell signal on LQD, the bond plot thickens.

 

Out of the above the most interesting candidates, from a technical standpoint, appear to be HON, JPM and UTX. I am already technically short JPM due to my physical silver position however if that story grows further the price could be in for a nose-dive, that may not happen so fast, that story may well drag on over time so I'll leave that for now. Honeywell looks vulnerable to a break downwards at this point, UTX perhaps also however the worst looking chart is most certainly LQD, it appears to be sitting on a previously significant support level.

 

 

Good call on today's action. LQD could be very interesting to watch.

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Good call on today's action. LQD could be very interesting to watch.

 

 

 

I have now doubled my position in LQD. The result is I have 10% of my trading capital tied up short corporate and government bonds, using both LQD and TBT.

 

I should point out that my indicator provides what I call a window of opportunity, the window could be open for 1,2,3, 7 or more days. The future is undetermined so I have to go with the most likely outcome. LQD appears to have topped early October, SPY may have topped early November. Greater % gains were seen today in the other shorts (17 of 100), it is unclear whether equities are in a new trend.

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I have now doubled my position in LQD. The result is I have 10% of my trading capital tied up short corporate and government bonds, using both LQD and TBT.

 

I should point out that my indicator provides what I call a window of opportunity, the window could be open for 1,2,3, 7 or more days. The future is undetermined so I have to go with the most likely outcome. LQD appears to have topped early October, SPY may have topped early November. Greater % gains were seen today in the other shorts (17 of 100), it is unclear whether equities are in a new trend.

 

The puts on LQD and calls on TBT are working out so far, the 17 sell signals I had on stocks;

 

AA

AES

ALL

AEP

AXP

T

CL

CVS

GE

HON

INTC

JNJ

JPM

MS

ROK

TGT

UTX

 

All are sideways or lower aside from CL, INTC, JNJ and JPM. I'm sure QE2 has spurred lots of retail traders/investors to get back into the market, perhaps that's putting a floor under stocks for now.

 

LQD

Screenshot2010-11-15at212011.png

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From the NASDAQ 100, TB sell signals generated either yesterday or today on;

 

BBBY

CELG

CEPH

INTC

MCHP

WYNN

SIAL

 

SPLS was a sell signal a number of days ago, EXPE was a sell signal on 11/11/10

 

I'll post the charts from the NASDAQ 100 tomorrow.

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I was stopped out of my LQD trade today for a nice profit, same for my TBT, although I've kept the longer dated calls on TBT.

 

Today I bought puts on EEM;

 

Sell signal was on 11th November

 

Screenshot2010-11-16at210519.png

 

However also noticed sell signals on MA and V. It would seem Mastercard, Visa and American Express get sold quickly during sell offs.

 

Mastercard

 

TB sell 11th Nov

Screenshot2010-11-16at211201.png

 

Screenshot2010-11-16at211513.png

 

American Express

 

TB sell 11th Nov

Screenshot2010-11-16at210847.png

 

Screenshot2010-11-16at211456.png

 

Visa

 

TB sell 11th Nov

Screenshot2010-11-16at211020.png

 

Screenshot2010-11-16at211437.png

 

If I see a good point tomorrow I may get into one of these, no guarantee sell the off continues though.

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Got out of EEM today, for a very small loss. The sell signal was 11th November, should only take trades where the sell has been generated within 24 hours.

 

I checked all the signals I found on the NASDAQ 100 over the last year. There were 152 signals, of those 124 were correct. That's a 81.5% hit rate. I had to count over and over again just to check it was right.

 

The charts can be found here

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Scanned through a list of 360 stocks with options that move in 1 cent increments this evening (phew!);

 

Found 26 buy signals;

 

QQQQ

CELG

FSLR

ADP

DCTH

DOW

FIS

FLEX

HSBC

JNJ

JNPR

MRK

PBR

RMBS

RTN

SBUX

SPWRA

SU

UPS

URE

WFR

WFT

XLB

XLF

XLV

XOP

 

No sell signals whatsoever

 

Went long QQQQ and FSLR

 

PBR is something I was looking to hold longer term so may also take a position in that very soon.

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Scanned through a list of 360 stocks with options that move in 1 cent increments this evening (phew!);

 

Found 26 buy signals;

 

QQQQ

CELG

FSLR

ADP

DCTH

DOW

FIS

FLEX

HSBC

JNJ

JNPR

MRK

PBR

RMBS

RTN

SBUX

SPWRA

SU

UPS

URE

WFR

WFT

XLB

XLF

XLV

XOP

 

No sell signals whatsoever

 

Went long QQQQ and FSLR

 

PBR is something I was looking to hold longer term so may also take a position in that very soon.

 

All of these bar 2 are higher since posting.

 

More signals were generated on 01/12/10, all buys taken from S&P100;

 

ABT

CVX

GILD

GS

JPM

NWSA

T

 

I additionally went long ABT, GILD and GS.

 

Lets see how this goes.

 

Apologies if my posting is a bit on the sparse side but I'm still trying to figure out the best way to play this system. Eg If I get signals on 26 one day do I take them all? Do I split my position down, it's a problem I'm working on right now, further complicated by the use of options.

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The puts on LQD and calls on TBT are working out so far, the 17 sell signals I had on stocks;

AA, AES ,,, etc.

All are sideways or lower aside from CL, INTC, JNJ and JPM. I'm sure QE2 has spurred lots of retail traders/investors to get back into the market, perhaps that's putting a floor under stocks for now.

LQD

Screenshot2010-11-15at212011.png

Nice call on: LQD-puts, TBT-calls...

 

I think QE2 is not working as designed, and maybe sometime soon equity markets will wake up to that.

TLT / T-Bond etf ... update

bmtlt3.gif

 

TLT has been falling steadily since late September. Look how the 21d.MA rolled over back in mid-October, and has steadily moved down. I expect that volumes on the lows will dry up before we see a final low here. Currently, the volume on low days remains strong.

 

THESE RISING RATES are NOT supposed to be happening, if the Fed's QE2 policy was working as designed !

 

The Dollar has benefitted from rising rates

 

UUP / US Dollar, 2X leveraged ... update

bmuup3.gif

 

The Dollar has shown a nice upturn, confirmed by the rising BigMo / 21d.MA. But I must point out that the volume on the rises is so far unconvincing, and so this rally mabe vulnerable.

Above excerpt if from my Dairy today.

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