26 replies to this topic

[diogenes227]

http://stockcharts.com/c-sc/sc?s=$SPX&p=D&yr=0&mn=8&dy=0&i=p45052470278&a=183294212&r=7309.png

[CLK]

Are you saying you never short as it is usually a losing trade ?

[diogenes227]

Are you saying you never short as it is usually a losing trade ?

Sorry. Didn't see this question before now.

Of course there are shorts, good ones, but the safe ones are usually in the context of the NYSI decline. The NYSI, being calculated on the A/D, is broad a measure of market breath as anyone would want (NYUD may be another but I've not done any work there), and thus I believe a particularly accurate measure of market psychology. In the end, it's all fear, greed and time, and if you'll look up at the above chart, you'll see the clock.

Take a look at that time in April and May when the SPX declined from 1219 to 1042 (how's that for a short?). What was the NYSI doing? Going down.

Take a look at the sharp drop in late June to July. What was the NYSI doing? Going down.

Take a look at the decline from mid-August the September 1. Going down.

Okay, now focus on those times the NYSI is rising -- Feb to April, briefly June to late June, early July to mid-August. What is the SPX (and every other index for that matter to one degree or another) doing while it's rising. They are going up.

Okay, look at now. The NYSI is rising. Let me say that again: THE NYSI IS RISING! And that is why everyone trying to short is either frustrated by their trades turning sharply against them or pretending they expected this all along but got short too early or just plain being driven to the poor house. They blame their frustration on all kinds of things from moon beams or confusing Elliott counts or the stupidity of those you can't understand the real fundamentals, but most often they blame the elusive "they" who are always manipulating the market overnight or behind the scenes or in some dastardly conspiracy with the evil FED.

There is a "they" and "they" are you and me and everyone else who trades, invests or pretends to know something about the market on CNBC. There are thousands of rationalizations for being on the wrong side of the trade but there ultimately no excuse except the pure emotions which come from risking hearth, reputation and every dollar we have, that none of us, being human, can escape.

So where are we right now? You're shorting, having trouble, and looking for a top. I'm long and having a pretty good couple of weeks. I've lightened up lately because we are overbought and I think we're going to have the typical sell-down that comes in the third/fourth week of the two-month rally cycle (we are in the third week). I suspect that will be a dip to buy because I'm looking at what happens after those green circles on the NYMO above and assuming this is a typical two-month McClellan rally cycle.

Yes, this can all abort at any time (the market can surprise at any moment -- for that there are stops) but until is shows signs of doing so I'm going to go run with the bulls because the NYSI is rising and the NYMO is all higher highs and higher lows, and it's the same with prices.

There will be plenty of time for winning shorts when opposite is true.

It's that simple.

Good luck to you.

[alexthered]

You only know NYSI is rising or falling after the fact though. The first couple of days "dots", how do you know to get out of longs and short? Thank you.

[diogenes227]

You only know NYSI is rising or falling after the fact though. The first couple of days "dots", how do you know to get out of longs and short?

Thank you.

After the fact?

The NYSI is all context but I use the NYMO to fine tune the turns since the NYSI tends to lag (the NYMO lows above lows preceding the NYSI turn on the chart above as an example).

However, for simplicity's sake, buy the first "dot" up on the NYSI. Buy as much leverage as you can stand. This is swing trading. UPRO is up nearly 13 percent since that first "dot" up and probably going higher still. TNA (my favorite) is up 11.7 percent since that Sept 1 turn on the NYSI. That's ten trading days ago.

Ten days.

There is no after the fact here. Only what you're willing to believe.

[SimpleTone]

Hi Diogenes, Thanks. Are you using the cci zero line on the etf in your system?

[diogenes227]

Hi Diogenes,

Thanks.

Are you using the cci zero line on the etf in your system?

Like you name.

No. I watch the CCI as an oversold/overbought indicator, and for divergences and confirmations. The zero line is telling as a confirmation, although I also like when it comes out of oversold or overbought (the negative and positive 100 lines) for that too.

If you're comfortable with the zero line, fine. Trading is a lot about finding an emotional comfort zone in which to make the trades.

Best to you.

[diogenes227]

Sometimes it hard to see if the glass is half full or half empty. So going with half full for now. Holding partial position on NYSI Sep 1 buy-- TNA up 13 percent and making no progress. Don't know if StockCharts will show it on the chart above, but I have the NYMO in TradeStation on an uptick, and prices have upticked some on the major indices, which hints we may have another up monster Monday. Was tempted to add on more TNA or UPRO but held off because the NYMO often likes to lick the zero line in this time frame before resuming the rally. Will try to jump all over it if it break across the highs of this week. Play defense and day trade otherwise. Have a good weekend, everyone.

[CLK]

Are you saying you never short as it is usually a losing trade ?

Sorry. Didn't see this question before now.

Of course there are shorts, good ones, but the safe ones are usually in the context of the NYSI decline. The NYSI, being calculated on the A/D, is broad a measure of market breath as anyone would want (NYUD may be another but I've not done any work there), and thus I believe a particularly accurate measure of market psychology. In the end, it's all fear, greed and time, and if you'll look up at the above chart, you'll see the clock.

Take a look at that time in April and May when the SPX declined from 1219 to 1042 (how's that for a short?). What was the NYSI doing? Going down.

Take a look at the sharp drop in late June to July. What was the NYSI doing? Going down.

Take a look at the decline from mid-August the September 1. Going down.

Okay, now focus on those times the NYSI is rising -- Feb to April, briefly June to late June, early July to mid-August. What is the SPX (and every other index for that matter to one degree or another) doing while it's rising. They are going up.

Okay, look at now. The NYSI is rising. Let me say that again: THE NYSI IS RISING! And that is why everyone trying to short is either frustrated by their trades turning sharply against them or pretending they expected this all along but got short too early or just plain being driven to the poor house. They blame their frustration on all kinds of things from moon beams or confusing Elliott counts or the stupidity of those you can't understand the real fundamentals, but most often they blame the elusive "they" who are always manipulating the market overnight or behind the scenes or in some dastardly conspiracy with the evil FED.

There is a "they" and "they" are you and me and everyone else who trades, invests or pretends to know something about the market on CNBC. There are thousands of rationalizations for being on the wrong side of the trade but there ultimately no excuse except the pure emotions which come from risking hearth, reputation and every dollar we have, that none of us, being human, can escape.

So where are we right now? You're shorting, having trouble, and looking for a top. I'm long and having a pretty good couple of weeks. I've lightened up lately because we are overbought and I think we're going to have the typical sell-down that comes in the third/fourth week of the two-month rally cycle (we are in the third week). I suspect that will be a dip to buy because I'm looking at what happens after those green circles on the NYMO above and assuming this is a typical two-month McClellan rally cycle.

Yes, this can all abort at any time (the market can surprise at any moment -- for that there are stops) but until is shows signs of doing so I'm going to go run with the bulls because the NYSI is rising and the NYMO is all higher highs and higher lows, and it's the same with prices.

There will be plenty of time for winning shorts when opposite is true.

It's that simple.

Good luck to you.

Right now we have a NYMO low above a low with a rising NYSI, I don't view that as a buy because it
is turning up above the zero line instead of below.
Using NYSI as context looks to create a lot of whipsaws since it lags. I know you have cited some examples but how about pointing out the ones
where NYSI turned but the market did not follow. It just does not seem as easy as you portray
it to be, but I may not be looking at the NYMO correctly.

Edited by CLK, 17 September 2010 - 06:38 PM.

[diogenes227]

Sometimes it hard to see if the glass is half full or half empty.

So going with half full for now. Holding partial position on NYSI Sep 1 buy-- TNA up 13 percent and making no progress.

Don't know if StockCharts will show it on the chart above, but I have the NYMO in TradeStation on an uptick, and prices have upticked some on the major indices, which hints we may have another up monster Monday. Was tempted to add on more TNA or UPRO but held off because the NYMO often likes to lick the zero line in this time frame before resuming the rally.

Will try to jump all over it if it break across the highs of this week. Play defense and day trade otherwise.

Have a good weekend, everyone.

Jumped on the cross over last week's highs. The glass is full.