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#61 dowdeva

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Posted 07 August 2009 - 12:03 PM

NYMO starting to set up a tops below tops structure. NYSI looks so superb here that I don't think it has any significance just yet, but it is a bell. Also NYMO about 1/3 to 1/2 way thru what can reasonably be expected for any NYMO cycle (4 to 6 weeks above or below 0 line). ~D

#62 diogenes227

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Posted 10 August 2009 - 01:16 PM

diogenes

Yesterday brought a tick down...red line...on the NASI. Yet you did not go short. Are you waiting for the NYSI to confirm the change? Do you trust the NYSI more than the NASI?

I'm very much impressed by this system since I first found you posting on the FF thread, and would like to learn more of your thought process that goes into taking or not taking a trade. I've studied this thread back to November and for a few of the trades it appears you made a move to the opposite side when only one of the indicators (NASI or NYSI) goes against the present trend. And for others you waited until you had confirmation with both?

Thank you for any insights you can provide. Consider me an eager student. :)


itrytowin,

Thanks for the post. Context is everything with the McClellan Oscillators and Summation indexes. At their most basic they tell if there is a prevailing up trend or down trend in the market. And since they are constructed on the Advance/Decline lines they give as broad an indication of general market direction there is. Stocks that want to go up have an easy time of it during a Summation rise and stocks that want to go down have to do so against the market trend. Viceversa, when the summation is declining.

But, to answer your questions, yes the NASI down ticked last week for one day and the NYSI was no where close to confirming it. Usually, these two, if they differ at all, only differ by a day. So the NASI dip appeared to be just a normal momentary pullback, and so it was. In fact it appears it was a "hook" -- which is to say one or two days down then acceleration in the direction of the previous trend.

It is also be noted, as dowdeva does here, that the McClellan was only part-way through a "normal McClellan cycle" -- it likes to go up 25 plus days or more -- so there was also a good chance that the NASI dip was only an additional buying opportunity (and so it was).

As to your question about whether I trust the NYSI more than the NASI, I do but I shouldn't. It's entirely possible to trade in the context of the NASI without ever looking at the NYSI.

However, if you're going to trade leveraged ETFs instead of, say, stocks, watch out for the lag in the summation indexes. Those ETFs can get ripped apart on the turn. Better to, as they say, sell too soon. For instance, since a basket comprised of SSO, QLD, and UWM is at the moment up nearly 25 percent since the NYSI buy July 15th, why not put in sell stops to guarantee a 20 percent or so profit and still give them some room to run?

Hope this helps.

Good trading to you. :)

Edited by diogenes227, 10 August 2009 - 01:17 PM.

"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."


#63 inamosa

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Posted 11 August 2009 - 06:36 PM

diogenes What are your thoughts here? Both MCOs are under 0 line at this time and both have downticks in their Summations Is it too early in the cycle? Just looking for your perspective Thanks
"Our job is not to predict where the market will go, but to interpret daily price and volume action to ascertain the facts of the current environment and make decisions based on that interpretation."
-Scott O'Neil (son of William O'Neil), Portfolio Manager at O’Neil Data Systems, when asked where the Dow would go in the coming months

#64 diogenes227

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Posted 11 August 2009 - 08:14 PM

alsomji,

Yes, both the NYSI and NASI gave sell signals today, and, yes I think it's too early in the cycle. In a typical McClellan cycle there is often a dip in the seventh or eighth week after the last deep Oscillator low (see blue circle below) before another run to new highs for the cycle. At least, that was the way it was in bull markets. We are entering the the seventh week. I would not be surprised to see another run to new highs for this rally before a more substantial correction.

But, I'm not going to fight the tape and for now this is a sell. One should either be flat or short. The leveraged short side ETFs would be SDS, QID, TWM, and if one likes to walk on the wild side, TZA and FAZ. (One might want to have tight stops, especially on the later screamers).

For the record, since the July 14th NYSI buy, a basket of the 2x leveraged SSO, QLD, and UWM finished this trade up 22 percent. And the wild 3x guys -- TNA and FAS -- were up 51 percent.

Good trading to everyone. :)

http://stockcharts.c...51&are=1457.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."


#65 inamosa

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Posted 11 August 2009 - 08:44 PM

Thanks for the prompt response diogenes Keep up the great posts cheers aly
"Our job is not to predict where the market will go, but to interpret daily price and volume action to ascertain the facts of the current environment and make decisions based on that interpretation."
-Scott O'Neil (son of William O'Neil), Portfolio Manager at O’Neil Data Systems, when asked where the Dow would go in the coming months

#66 diogenes227

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Posted 12 August 2009 - 03:30 PM

The NYSI and NASI turned to the upside again today after only one day to the downside. This is a buy. The primary basket of leveraged short ETFs -- SDS, QID, TWM -- lost 3.1 percent. :cry: However, the stops recommended above would have cut that loss significantly. Awfully bullish behavior continues in the market. The frustration of those who have been persistently shorting against this indicator for the last month or so (and even since the March blast) is obvious on the FF board. Talk about beating your head against a relentless rally... If this is a typical McClellan cycle, we will see new highs for the rally before any significant sell off occurs. Granted there could be a whipsaw here with the Fed mucking up the market during this period, but Fed days end up being hard to find on charts in the fullness of time. So back long SSO, QLD, UWM. 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."


#67 diogenes227

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Posted 16 August 2009 - 10:44 PM

Getting an irritating whipsaw here. NYSI and NASI once again gave sells on Friday. The long leveraged ETF basket --SSO, QLD, UWM -- lost 1.1 percent. Short again -- SDS, QID, TWM. 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."


#68 diogenes227

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Posted 17 August 2009 - 03:05 PM

For the record posted this chart on Fearless Forecasters today, noting that a basket of 3x leveraged short ETFs -- SPXU, TZA, FAZ -- was up more than 8 percent since the 8/14 NYSI/NASI sell signals. Eight percent plus, one trading day.

Good trading to everyone. :)

http://stockcharts.c...31&are=7555.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."


#69 darnelds

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Posted 17 August 2009 - 03:58 PM

"NYSI and NASI once again gave sells on Friday." These indicators are not updated until after the close. Who made 8% today after it gapped up unless they are front-running the signal?

#70 dowdeva

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Posted 17 August 2009 - 11:07 PM

Time for the obligatory kiss-back to the 0 line, either Tuesday or Wednesday. I think the sheer steepness of the ascent in the summation oscillator supports the idea of a snap-back too, also open interest at 100 strike on both puts and calls in SPY.