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#101 diogenes227

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Posted 01 October 2009 - 11:27 AM

Short the market again using the leveraged ETF basket -- SDS, QID, TWM.

Good trading to everyone. :)


Short basket went through 5 percent profits and indexes starting to get oversold so tightening stops.

:)

"If you've heard this story before, don't stop me because I'd like to hear it again," Groucho Marx (on market history?).

“I've learned in options trading simple is best and the obvious is often the most elusive to recognize.”

 

"The god of trading rewards persistence, experience and discipline, and absolutely nothing else."


#102 diogenes227

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Posted 05 October 2009 - 02:29 PM

Another rough day for a bearish signal. I just stopped out the leveraged short basket for a 5 percent gain. Not bad in this choppy environment, but at its peak it was up more than 8 percent. Once again, just as soon as the market gets oversold... This looks like it could be a run back to the zero line on the Oscillators and then we'll see how it goes. As long as the Sums are down the context remains bearish. Trader Vic once said never let profits turn into a loss -- no kidding, if and when you ever have any. :o

"If you've heard this story before, don't stop me because I'd like to hear it again," Groucho Marx (on market history?).

“I've learned in options trading simple is best and the obvious is often the most elusive to recognize.”

 

"The god of trading rewards persistence, experience and discipline, and absolutely nothing else."


#103 apprentice

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Posted 05 October 2009 - 02:50 PM

Diogenes, I'm having trouble seeing what you're seeing on the charts. When you speak of the oscillators, are you referring to the McClellan alone or others as well. When I look at the McClellan its looks like a blurr of up and down movement and I can't see the trend you see. Please help me to see more clearly what you're seeing. Thanks Rich d



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#104 apprentice

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Posted 05 October 2009 - 03:23 PM

Diogenes I'm having trouble understanding what you said in your last post. The oscillators which should return toward zero. Are they the McClellan alone or others? What time frame of chart should give the clearest signal? As I look at the McClellan I can't see beyond the relentless chop chop chop of the graph to visualize a trend. Please guide me. Rich



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"It is not your duty to complete the work,
but neither may you desist from it."

--Talmud

#105 diogenes227

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Posted 05 October 2009 - 05:33 PM

Diogenes

I'm having trouble understanding what you said in your last post. The oscillators which should return toward zero. Are they the McClellan alone or others? What time frame of chart should give the clearest signal?

As I look at the McClellan I can't see beyond the relentless chop chop chop of the graph to visualize a trend. Please guide me.

Rich

Rich,

Sorry for not getting back to you right away. I've been waiting for Stockcharts to update to see if I can illustrate what you're asking for and clear this up for you.

There are variations of the chart below throughout this thread but let's just look at this chart for the time being. The NYSE McClellan Oscillator (the NYMO) is in the top graph, while the NYSE summation index (the NYSI) is the series of dots running on the gray line on the chart with SSO (the leveraged long ETF for the S&P 500). The NYMO and NYSI are both oscilaltors but the NYSI, being a running total of the readings on the NYMO, up and down, above and below the zero line, is the slower and more long term of the two.

There are also versions of these (the NAMO and the NASI) for the nasdaq. If I says "oscillators," plural, I'm talking about the New York and Nasdaq together (but the two oscillators are so similar, you largely only need one).

In this response, I am primarily referring to the NYSI for the buy and sell signals on this thread, and for the context needed to trade one side of the market or the other -- when the NYSI is rising be long, when it is declining be short or flat. That's the basic idea. Most stocks move with the market and NYSI, because it calculated on the advancing and declining issues, gives the broadest and best read I have ever found for the mass psychology of the market. Still, it needs to be stated again, because it is a slower Oscillator you will never get the top or the bottom of a move trading the NYSI signals but it avoid the sometimes rapid whipsaws of the McClellan oscillator itself.

Let me point out the features of the chart below in hopes it help your understanding especially in relation to my latest post. If I'm being too basic here I'm sorry but when I first started studying these Oscillator nothing was clear to me and I still sometime misread them or get emotional and try to trade against them.

The NYSI on the SSO chart, as you can see, is declining so the market overall is retreating, just as it was advancing up until 8 days ago when the NYSI was rising. Simple -- if its rising, trade the long side; if it's falling trade the short side.

Now look at the NYMO in the top chart. I take it that's where you are seeing the chop, chop, chop that makes no sense. You will always see that chop because those are the oscillations of the McClellan Oscillator itself from Plus 50 or so to Negative 50 or so. I view that chop as a spinning wheel rolling the market up and rolling it back down again. It has a pattern at the moment of lower highs and lower lows. Obviously, it is in a down trend also.

The trend is down, but nothing goes up or down forever.

Now look at the last five days. Note that the NYMO got below the negative-50 line as most indexes went down four days in a row. When I say this is probably a run back to the zero line I mean exactly that -- see how it has turned up with today's bounce (that's the start of the run). I'm saying that in the bearish context of declining NYSI. If you look back, you'll see this has happen before and turned down again below the zero line before (not always, but usually). So let's say it runs toward the zero line now this time too but doesn't go through it to turn up the NYSI and then clicks down again -- that's another shorting opportunity, and you could reasonably expect follow through to the downside the next day (not always).

I may be wrong, but given my experience with this indicator, I expect another shorting opportunity and I expect to see lower prices than we've seen so far before this decline in the NYSI is finished.

I've marked with green circles the oversold areas on the NYMO in recent times. As you can see since the March bottom, the market has readily rallied from those points. That, I think, is a sign of how bullish the current market environment is. One of the great things about the McClellan is it gives you advance notice of when to start thinking about the next turn.

We are there now and need to start thinking about a possible turn -- if Friday's low in the NYMO is not taken out in the next few days, and the NYMO puts in a low above a low in its pattern, that turn to the upside may be upon us sooner than I think.

And when the NYSI turns up again, the market will be bullish again, period.

I hope this helps and doesn't confuse further. :)

http://stockcharts.c...14&are=6720.png

"If you've heard this story before, don't stop me because I'd like to hear it again," Groucho Marx (on market history?).

“I've learned in options trading simple is best and the obvious is often the most elusive to recognize.”

 

"The god of trading rewards persistence, experience and discipline, and absolutely nothing else."


#106 edamat

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Posted 05 October 2009 - 09:15 PM

Diogenes: very much appreciate your taking time to give such detailed explanation. it's very helpful. we sure will learn a lot from you along the way... many thanks as usual.

#107 diogenes227

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Posted 08 October 2009 - 08:47 PM

Got a buy signal today on the NYSI by a whisker -- a positive 5 points on NYMO. The NASI is still negative but barely -- negative .51 on the NAMO. This market does not make it easy even when it's simple. The leveraged short ETF basket finished the NYSI trade flat -- down .22 percent. Given that the indexes are up 4 days in a row and some of them closed with dreaded doji candles, the leveraged long ETFs -- SSO, QLD, UWM -- are in play on the NYSI buy but a better strategy might be to buy the dips going forward as long as the NYSI hold the zero line. Good trading to everyone. :)

"If you've heard this story before, don't stop me because I'd like to hear it again," Groucho Marx (on market history?).

“I've learned in options trading simple is best and the obvious is often the most elusive to recognize.”

 

"The god of trading rewards persistence, experience and discipline, and absolutely nothing else."


#108 edamat

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Posted 09 October 2009 - 09:34 AM

"as long as the NYSI hold the zero line." you mean NYMO hold the zero line, right? can't see NYSI anywhere near 0? thanks for updates.

#109 diogenes227

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Posted 09 October 2009 - 12:23 PM

"as long as the NYSI hold the zero line."

you mean NYMO hold the zero line, right? can't see NYSI anywhere near 0?

thanks for updates.

Yes, NYMO. Sorry. Sometimes get done in by the maze of acronyms. :blush:

"If you've heard this story before, don't stop me because I'd like to hear it again," Groucho Marx (on market history?).

“I've learned in options trading simple is best and the obvious is often the most elusive to recognize.”

 

"The god of trading rewards persistence, experience and discipline, and absolutely nothing else."


#110 diogenes227

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Posted 13 October 2009 - 02:59 PM

Unless the market firms like crazy into the close, it appears There will be a sell on both the NYSI and NASI, although it's a close call on the NASI. I have the long ETF basket up 1.5 percent (at the moment...) for the few days of the NYSI buy signal. Once again the short leverage ETFs will be in play -- SDS, QID, TWM. More later. :)

"If you've heard this story before, don't stop me because I'd like to hear it again," Groucho Marx (on market history?).

“I've learned in options trading simple is best and the obvious is often the most elusive to recognize.”

 

"The god of trading rewards persistence, experience and discipline, and absolutely nothing else."