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IYB's Seven


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#11 Rogerdodger

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Posted 21 August 2005 - 07:09 PM

More from IYB:

As many know, I've been using two trading signals for the seven sentinels: buy signals when all seven say "up", and sell signals when all seven say "down". Thus I stay long until I get a sell signal, then sell and go short until a buy signal, etc. I haven't been completely satisfied with this method this as too often gets me out late- only when the trend has reversed. I'd much rather exit prior to the reversal, then wait for the reversal signal to initiate trades in the other direction, or a reconfirmation of trend from the SS's to get back in.

Thus, I'm adding two more signals for a total of 4. The two new ones are "close out longs" and "close out shorts", which can be early warnings of reversal, or simply an indication of a "stall" in the main trend. The latter two are much more sensitive than the seven together, and they give liquidation signals much earlier than the full reversal signals, or within an ongoing trend.

The last two COL (close out longs) signals generated by the new rules are shown on chart. Since the last full signal is a buy, and no reversal has been signaled, my position would be (using new signals) flat -having closed longs, waiting for a new signal. My actual position is long, because I did not act on the COL's, and I will remain long with stops in place, because I see the seven gearing up for a new buy signal, and because sentiment has been extreme bearish (for this context) lately.

I was very disatisfied with staying long even though I watched the MCO's roll over in early August, and was extremely uncomfortable about it. Thus I've developed more sensitive signals to tell me when to get out prior to, or in the absense of, a full blown trend reversal. That is to say, at a time like right now, using the new signals, I'd be out two weeks ago, but NOT short. Just cash.

The new signals are based on SPX, NYMO, and TRIN for SPX related trading ---- and on NDX, NAMO, and TRINQ for NDX or QQQQ related trading.

I'm not yet ready to release the exact formulae, since I'm still "tweaking".

These are my methods, and of course you have your own. If they help in some way, great. If not, that's okay, too. Btw, for those who trade in much shorter time frames - you may not want to discard, out of hand, the value of knowing the trend in the framework shown here, in order to provide CONTEXT to your shorter term trends.

Good Trading. D

http://stockcharts.com/def/servlet/SharpChartv05.ServletDriver?chart=$SPX,uu[r,a]dcclyyay[d20040615,20050821][pb8!b21][vc60][iuah12,26,9!ld20!lo14!lh14,3][J45714674,Y].png

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#12 Rogerdodger

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Posted 22 March 2008 - 03:09 PM

Here are the Seven Sentinels. They were designed with one overriding idea in mind: ~simplicity~ They were this simple-minded trader's attempt to simplify a complex environment for purposes of defining the prevailing swing trade direction. and to greatly reducing emotion and/or whipsaws. And they are just one small part of the whole big picture of markets, from my point of view. I use them in conjunction with sentiment, cycles, and the direction of the credit cycle. But for me, they work very well in defining the short term ('swing") trend direction.

The simple rule that I use to identify the prevailing swing trade direction (approximately 2-10 weeks) is this: when all seven go to buy mode, that is a buy signal that stays in effect till all seven go to sell mode, which then triggers a sell signal, which stays in effect till....etc. I won't go into "early warnings" at this point.

The exception to that rule is that when the seven go to a buy or a sell without confirmation by the direction of the moving averages, I regard that as a likely whipsaw. For example, if all moving averages are moving down, and we get an upside crossover on all- then that is likely either a false or a premature buy signal. If, on the other hand, the moving averages had already turned in the direction of the crossover, and particularly if they had already set up positive divergences prior to the crossover, then I put a whole lot of faith in the SS's message.

You may find them useful; you may not. Trading is a very individual business. Others have their own effective methods, and that's how it should be. Here are the definitions I use for each, individually, to determine a buy or sell signal:

1. $BPCOMP- when the daily reading crosses either from above into the BB, of from within the BB to under the BB, that is a sell signal for this one indicator. A buy signal is generated in exactly the opposite way.

2, 3, 4, and 5- when the daily reading crosses downward through the MA from above the MA, that is a sell signal for this one indicator. A buy signal is generated in exactly the opposite way.

6 and 7- when the daily reading crosses upward through the MA from below the MA, that is a sell signal for this one indicator. A buy signal is generated in exactly the opposite way.


http://stockcharts.com/c-sc/sc?s=$BPCOMPQ&p=D&yr=0&mn=6&dy=0&i=p03557278111&a=132243312&r=4199.png
http://stockcharts.com/c-sc/sc?s=$NAMO&p=D&yr=0&mn=6&dy=0&i=p95694935821&a=132241851&r=4369.png

http://stockcharts.com/c-sc/sc?s=$NYMO&p=D&yr=0&mn=6&dy=0&i=p67690834570&a=132240665&r=9880.png

http://stockcharts.com/c-sc/sc?s=$NAHL&p=D&yr=0&mn=6&dy=0&i=p28936177142&a=132242597&r=8810.png
http://stockcharts.com/c-sc/sc?s=$NYHL&p=D&yr=0&mn=6&dy=0&i=p11594829525&.png
http://stockcharts.com/c-sc/sc?s=$TRINQ&p=D&yr=0&mn=6&dy=0&i=p85753661837.png
http://stockcharts.com/c-sc/sc?s=$TRIN&p=D&yr=0&mn=6&dy=0&i=p78330912829&a=132242143&r=4628.png



#13 Rogerdodger

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Posted 01 December 2008 - 10:54 AM

Thanks, F. Okay, now the rules:

1. When all seven are in buy mode simultaneously following positive divergency patterns (higher reading in the 6 day EMA's of NAMO, NYMO, NAHL, and NYHL--vs. new lows hit in SPX) -- This constitutes a Seven Sentinels Buy Signal. {This occured Weds 11-26, for example. Please notice the massive positive divergence between the October 9 lows and the November 20 lower lows on SPX- where virtually every momentum measure on Earth registered a positive divergence on the "retest"}

2. When all seven are in sell mode simultaneously following negative divergency patterns (lower reading in the 6 day EMA's of NAMO, NYMO, NAHL, and NYHL vs. new highs hit in SPX) -- This constitutes a Seven Sentinels Sell Signal. {This occurred many times in 2008}

3. A signal defines the CONTEXT of the market for my trading purposes, and stays in effect until the opposite signal is given. Occassionally signals only last a few days before being reversed, but more often they last weeks or even months- as the market tends to trend in the direction indicated. While the market is in SSBS mode, I may for example, buy and hold, or trade long positions using weakness to take on positions and strength to exit, or a combination of both, or any other appropriate bullish trading strategies. What I do NOT do during an SSBS period is try to countertrend by shorting strength or any other such counter trend strategy. And while in SSSS mode, I may for example, short and hold, or trade short positions using strength to take on positions and weakness to exit, or a combination of both, or any other appropriate bearish trading strategies. What I do NOT do during an SSSS period is try to countertrend by buying weakness or any other such counter trend strategy.

4. The seven sentinels each have, individually, a buy mode and a sell mode- and as explained above, it is the allignment of all seven under specific conditions that constitutes a signal and defines for me the context or prevailing trend of the market. Here are the individual buy/sell triggers:

TRINQ and TRIN: Daily reading below 13 Day EMA is buy mode, reading above 13 Day EMA is sell mode.

For NAMO, NYMO, NAHL, NYHL, daily reading above 6 Day EMA is buy mode, and reading below same is sell mode.

For BPCOMPQ, reading within the Bolinger Band following reading below constitutes buy mode, as do readings above and outside of BB following reading within the band. Put another way, either positive crossing constitutes buy mode. Reading within the Bolinger Band following reading above constitutes sell mode, as do readings below and outside of BB following reading within the band. Put another way, either negative crossing constitutes sell mode. It stays in buy mode or in sell mode until it recrosses in the opposited direction.

Those are the rules. Strict insistance upon divergent set ups have cut down considerably on the number of signals, and have made the remaining ones, I believe, much more reliable.

Use it if it helps. Ignore it if it doesn't. We all have our own methods. This one works well for me. Good Trading and Happy Thanksgiving, D



#14 Rogerdodger

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Posted 15 March 2009 - 02:12 PM

Here's Don's post from the March '09 Buy signal:

I'm often asked what duration SS signals can be expected to run. Here are the last 6, 4 of which were posted here in real time as shown below. Durations vary. Good trading, D
Posted Image


SSBS Today.
And what a day to be out travelling. Covered/covering/looking to go long. Good trading, D



SSBS Today
I did most of my buying yesterday, as posted, but I should point out that the SSBS is a good one, the first time all year that we've had all seven go to buy following a clear positive divergence across the board. It's no coiincicence, I'm sure, that this is the first time all year that mortgage markets have had a very strong bid for the second consecutive day, with 30-year holding around 5.25%

I believe an Intermediate Term (Months) Rally is underway. I'm adding double long UWM at 17.81 and QLD at 26.10.

Best, D



SSSS Today.
While all seven are now on sell, divergences have been not been pronounced, as yet anyway. But I've got to respect the momentum trend- especially when it turns negative in a primary bear market, as is the case here. I'll be selling rallies from here on out, rebuilding a short position. Starting from flat position here, and watchin' for good entries on short side. Fwiw. D



SSBS Today
No big surprise there, of course. I expect to be addin' long positions and if so will post them in real time, along with stops, below, fwiw. But first things first. Time to go study Decision Point ;) .



#15 IYB

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Posted 31 May 2009 - 06:49 PM

http://stockcharts.com/c-sc/sc?s=$NAMO&p=D&yr=0&mn=6&dy=0&i=p71281787216&a=132241851&r=647.png
http://stockcharts.com/c-sc/sc?s=$NYMO&p=D&yr=0&mn=6&dy=0&i=p88893451391&a=132240665&r=472.png
http://stockcharts.com/c-sc/sc?s=$NAHL&p=D&yr=0&mn=6&dy=0&i=p26792985652&a=132242597&r=943.png
http://stockcharts.com/c-sc/sc?s=$NYHL&p=D&yr=0&mn=6&dy=0&i=p70528633829&a=132243114&r=166.png
http://stockcharts.com/c-sc/sc?s=$BPCOMPQ&p=D&yr=0&mn=6&dy=0&i=p93731664353&a=132243312&r=618.png
http://stockcharts.com/c-sc/sc?s=$TRIN&p=D&yr=0&mn=6&dy=0&i=p81980886219&a=132242143&r=445.png
http://stockcharts.com/c-sc/sc?s=$TRINQ&p=D&yr=0&mn=6&dy=0&i=p17935983525&a=165860142&r=117.png
http://stockcharts.com/c-sc/sc?s=$SPX&p=D&yr=0&mn=6&dy=0&i=p24356331235&a=163230813&r=549.png
http://stockcharts.com/c-sc/sc?s=$SPX&p=D&yr=1&mn=11&dy=0&i=p78715592757&a=161831573&r=260.png
“Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, one by one.” Charles Mackay, Extraordinary Popular Delusions and the Madness of Crowds