That sell signal was given with Thursday's figures.
With the NYSE and DJIA both closing higher, we still had negative market internals - i.e., more down volume and declining issues on the NYSE that rising volume and issues. This disparity between breadth and price does not necessarily mean something right away. On Oct 21, we had the opposite disparity, more up volume and rising issues compared to declining volume and declining issues. Yet with the DJIA closing at 9747.64 on Oct. 21, the markets declined the next day. Should we expect the markets to rally this time? I don't know.
When I developed my system, I wanted it to have a certain mechanical aspect. Keep in mind, no system is faultless. My goal is to have more winners than losers, my winners to be larger than my losers and finally to limit my losses (limit risk per trade). I bring this up because from my experience in the markets, I think we have a setup for some whipsaw action where we may see the markets decline further over the next day or two (more than likely Friday) and then rally back up toward 9700 or even higher(basis cash). If you look at the Dec DJIA futures, we now have a gap which may or may not be filled. My experience suggests it will be filled.
The reason I state this is admittedly subjective. As you view the charts, you will see that internally (breadth, volume, etc.) the markets have not broken support. So we have the potential for a bottom of some degree close at hand.
Below is the first chart of the updated system. Both the volume and McC Osc (non ratio adj) are below my proprietary signal which generates a sell.
Nonetheless, I have a short basis the close 9563 (futures) with a stop (based on cash) at 9622. The reason I use cash figures for my signals and stops are because futures tend to spike hitting stops to frequently. I keep a mental stop on cash which requires discipline to execute when triggered by the cash figures. Lossed come and go and are unavoidable. Manage them are generally you are okay.
Good luck,
