173 replies to this topic

[diogenes227]

TZA reversal bar, uptick in NYMO -- closed second half of TZA at the close for 5.5 percent gain. NYMO and NYSI remain in sell-the-rallies mode. Good luck and good trading.

[DrSP]

diogenes, Is this the 1st time for signal failure? I have been stopped out, that's what we call market discipline, but I am just asking.

[diogenes227]

diogenes, Is this the 1st time for signal failure? I have been stopped out, that's what we call market discipline, but I am just asking.

I'm not sure what signal at this point you think has failed. And I haven't thoroughly research every signal in market history but I doubt there's been a real "1st time" signal failure in the market since the Deity bet the devil that Adam wouldn't eat the apple no matter how hot Eve was. Signals fail all the time. That's why there are stops.

So, let's assume you mean the sell in the market based on the high below a high close on Sept. 6th. That sell is still operative given there are no lows above lows on the NYMO. If one were to hold TZA since that sell went into place the signal is not doing well (which I presume is why you're asking). With last week's five up days, TZA is down about 9 percent on that hold. But, as I've said before, a trader should put the trade on and then play defense.

As you can see from the posts above I sold half my position on the 9th for a 10 percent gain (that was a matter of too far too fast in a possible bear market), and sold the second half for 5.5 percent on the upturn in the NYMO that led to last week's rally. With the high below the high in place I did not play the long side in anything other than a couple of stocks. In retrospect, of course, I wish I had (from Monday's NYMO upturn to Friday's downturn, TNA ran up 15 percent! What a great swing! ). Looking back, I'm thinking I maybe should have put more weight on the NYMO ticking up from overbought with TNA roughly at the bottom of its recent range...but you know how it goes, sometimes market discipline leaves you on the sidelines too.

If that NYMO uptick was not compelling enough, another possible stop would have been at breakeven after being up more than 10 percent -- as in "never let a profit turn into a loss." Another possible stop would have been when the NYSI turned up on the 14th -- a loss of about 4.7 percent in TZA, but at least it keeps one from having to make up 9 percent.

It's good you used a stop also. What or when was your stop?

So where are we now? The sell on Sept. 6th is still operative so with the downturn on the NYMO Friday (I see on another post you didn't think it was any big deal and you may be right given how strong the rally has been) that sell has been renewed and that makes tomorrow an important day for the bears. If this is a bear market, the best bet with a failure of breath while the market put in a fifth consecutive day up and in TNA's case with three days of decreasing volume is to the downside. I have a short on and will strictly play defense.

If the market is up again tomorrow (a real possibility with a rising NYSI) and it turns the NYMO up that will be a low above a low and you will have anticipated a failure of the short signal, but definitely not the "1st time" this particular signal has failed. In fact, during the past three years, this particular NYMO short signal has failed two-thirds of the time (that's what bull markets do to shorts) but given the NYMO's read of market internals, those short signals have still managed to capture the big moves for a major profit in TZA overall.

I have updated the SPY chart from above to illustrate what I'm talking about.

By the way, thanks for asking.

Good luck and good trading.

http://stockcharts.c...1641&r=9979.png

Edited by diogenes227, 18 September 2011 - 03:35 PM.

[DrSP]

Why did you place a down arrow on the latest signal? Are you using any and every "turn" to say you have a signal? That's not right. I am talking about the signals for this thread, nothing outside. From the last signal (not friday's signal but the week before), we went lower = TZA was a success but this signal was supposed to be used as a swing wave signal. Not a chop wave signal. Yes, I have been stopped out at a win %, that is what I called market discipline but that doesn't answer our thread's swing wave signal. I don't know if there were failures before, but since I have been closely watching, the signal failed 8 days back.

[diogenes227]

Why did you place a down arrow on the latest signal?

The arrows are just an attempt to illustrate the turns, either as the signals begin or as they continue...

The rest of this is pretty much answered in this discussion on the FF board:

PLAYING DEFENSE

[diogenes227]

Just copying this comment from Fearless Forecasters this week for the record of this thread (and so I know where to find it ):

BREATH ALONE

Certainly can't argue with success and price has always been a declared king, and I've often told myself (and everyone else besides rolleyes.gif ) that "breath and price today is a continuation signal for tomorrow", but I have to say when it comes to getting a simple read on the mass psychology of the market I've begun to believe it's breath and maybe breath alone.

It's not always this obvious nor this precise of course, but last Friday the SPX was up for the fifth consecutive day, as was the NAS Comp, as was the Dow, as was the Russell, but breath, as measured by the NYMO, turned down. And the rest as they say...

NAV's comments (as always) about price alone in the link above are certainly worth noting.

Should also be noted that, while the Sept. 8th sell is still on, the NYMO clicked up this Friday, this time moving with the indexes instead of leading them, signalling a possible bounce. If one were holding short on the Sept. 8th signal (I am not, having been in and out a couple of times), TZA is up about 16.4 percent, SPXU is up 11.2 percent, a SPY short is up 4.6 percent (a drop of nearly 50 SPX points) -- the point being Friday's NYMO uptick was another nice opportunity to lighten up depending on an individual trader's personal style.

But to reiterate, I'm tracking that signal to the next low above a low on the NYMO (and an eventual NYSI rise). Until then, it's still the short side that's the side to be on.

Good luck and good trading.

[Darris]

diogenes, when time permits, when do you normally update your MCO chart? Just wondering if we will get a green circle today. thanks.

[diogenes227]

http://stockcharts.c...1656&r=8819.png

[DrSP]

diogenes, Since we have had enough turns in the last 3 - 4 months, I believe we are at a point where we can evaluate this tool in the context of this current bear market. Is it useful? No? success rate? Failure rate? etc

[diogenes227]

diogenes, Since we have had enough turns in the last 3 - 4 months, I believe we are at a point where we can evaluate this tool in the context of this current bear market. Is it useful? No? success rate? Failure rate? etc

Okay, let's evaluate it but why just in the context of the bear market? How about year to date? That gets the last of the bull and all of the bear so far.

How about this test? Buy $1 million worth of TNA on the close each time there is a low above a low on the NYMO, sell those shares on the close of the day each time there is a high below a high on the NYMO. Buy $1 million worth of TZA on the close each time there is high below a high on the NYMO, and sell those shares on the close of the day each time there is a low above a low on the NYMO. In the market one hundred percent of the time either long or short from January 1, 2011. Would that be an adequate evaluation?