IT pattern

The market is either in a consolidation or finishing a wave 4. I'm looking IT short here, or on a bounce. This is not December of last year, wrong season and wide swings, not likely to break into a tight rising channel, if it breaks out it most likely will be equal to the move off the bottom in June. The A/D is off new highs and price is a lot lower, this is bearish to me. I'm looking to short here with a small hedge in Aug. contracts. I think I break even at the worst. I can trade around this with daily setups. IT equals 1-3 weeks.

The market is either in a consolidation or finishing a wave 4. I'm looking IT short here, or on a bounce.
This is not December of last year, wrong season and wide swings, not likely to break into a tight rising channel,
if it breaks out it most likely will be equal to the move off the bottom in June. The A/D is off new highs and price
is a lot lower, this is bearish to me.

I'm looking to short here with a small hedge in Aug. contracts. I think I break even at the worst. I can trade around this
with daily setups. IT equals 1-3 weeks.

There's a famous quote from the Bible... Not sure, but I think it was the Almighty talking to Moses at the burning bush. He said: "Follow NYMO and NYSI, they will lead you to the promised land." Maybe I got that wrong? Maybe it was "Follow the NYMO and NYSI, they are the keys to the kingdom." Maybe it wasn't even said to Moses. Oh, well, getting old... Regardless, like a lot of the Bible, it was good advice. You could look it up to see what's what (promised land? kingdom?...probably doesn't matter all that much...). Anyway, you'll have some great reading while you're looking for the exact quote.

Have a good weekend.

Are you saying wait for NYSI to turn ?

Didn't Almighty also say not to rely on any one indicator ?

As a matter of fact, if you created a mechanical system that bought every time NYSI crosses over its 5 day average, and sold short when it crossed under, the results since 2005 till now trading 1 ES contract per side would look like this :




If your automated system would buy or short every time NYSI changed direction, performance would look like this: (ouch)




The best result would be if you only bought or sold short every time NYSI went below or above 0, but I don't think you'd be happy with that either:

How do you get equity curves trading ESU12 going back to 2005?!?!?!?!? Maybe your software takes care of that, but just for kicks, how about just using SPY? Then all you have not accounted for is dividends lol.

How do you get equity curves trading ESU12 going back to 2005?!?!?!?!?

Maybe your software takes care of that, but just for kicks, how about just using SPY? Then all you have not accounted for is dividends lol.

Its just set up as a continuous contract. Tradestation has the historic data.

Trading the dividend paying SPY with this system would definitely be better. You'll lose less money

Are you saying wait for NYSI to turn ?

Not necessarily since the NYSI lags, and yes.

This looks like a good short right now. Besides, if there's any follow through to down side Monday, the NYSI will turn (it's only up one point in Stockcharts and 5 points in my TradeStation). So if you're short now, I'd say pick a stop and let it ride. I'm going to look at Monday's open and if there's continued weakness, I'd short it and put in a stop. If there's no follow through to the down side Monday, get out of the way quickly because running bulls take no prisoners.

Now I'm a swing trader, so I'm going to try to trade the swings. When the NYSI is declining, shorting the rallies (see the red lines on the chart) with a stop. Hopefully the stop is not hit and ideally I get to cover at oversold on the CCI (or my other indicators, like a NYMO uptick). Just as since early June it's been buying the rallies (the green lines on the chart) and selling overbought (on the CCI or on a NYMO down tick or on a down shift in my stock basket) -- some real winners this past month. (Probably should note this SPX/UPRO chart is just for illustration. I'm primarily trading TQQQ, some TNA, and some stocks these days.)

But if you want to trade on the IT, then the stop is important because you want to be protected but stay with the move longer. For example, let's consider May. The blue line in May might be where we are as of yesterday, with the NYMO drop from weakness and the NYSI about to turn. If the market falls Monday, we will be at the red line in May and IT short. Put the stop, say... above the previous day's high (Friday's high), or even Monday's high if we're down on Monday and hang on until you're either stopped out or tired of making money or the NYMO's making lows above lows (the blue line in June) or the NYSI turns up again (the green line in June).

Doesn't always work, stops get hit, but that's the NYSI context for which side of the market to be on I've always talked about (and IYB has also talked about and FIB and Maineman in the past talked about). It's easy to read -- it's either going up or going down, simple as that. It's a lot easier to trade with the mass psychology (breadth) on your side. That's what I mean by "follow the NYMO and NYSI, it will lead you to the profit land."

Good luck and good trading.

P.S. At least, when the gods of trading spoke to ME, this is what they said at the burning bush.

http://stockcharts.com/c-sc/sc?s=$SPX&p=D&yr=0&mn=5&dy=0&i=p91667759948&a=272527327&r=1342908964085.png

Nice summary of how you use NYSI, Dio.

Speaking of Maineman, he has been on hiatus on his blog for a few weeks. It can be found here.
I wish he would come back and post once in awhile.

Doc

The April 18th sell makes no sense according to your rules, although NYSI was down there was no high below a high on NYMO and CCI was still going up just at midpoint. If you had waited for the high below a high you would have shorted at the bottom on April 23rd, CCI was not below 100 yet. May 30th is another one, no high below a high, if you had waited for the high below a high you would have shorted June 1st, right at the bottom, but then CCI was below 100 although not turned up yet, just because CCI gets under 100 does not mean the market will turn up, it can keep going down. Maybe you don't initiate shorts with CCI under 100, that case you would miss a lot of the lengthy bear market runs. If you are going to trigger on NYMO and use NYSI for context you have to be consistent with it, a lot of those were triggered off NYSI alone with CCI some, if you trade every time NYSI turns you won't do all that well. I can go back in hindsight and pick out the ones that worked great but in real time I have to have in stone rules to mechanically go by, I can't just say I think this time I'll go with NYSI, or just NYMO the next time or NYSI/CCI looks good this time.

Edited by CLK, 22 July 2012 - 05:49 AM.

There are a lot a lot of fish hooks trading the NYSI turns only that would have cost you, and even the last six months some of the turns
only yielded a day or two of gain or worse.

Here are the failures over the last year, maybe if you waited for two days in a row to act you would eliminate most
whipsaws, but then you would miss most of the gains as you would be getting in late on the tops and bottoms.