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Re: My last, nevermind...(found it)
Got your email and successfully downloaded the file. Where does one find the daily NASI number (to that many decimals) and/or how is it calculated?
Long 500 @ 41.40, will look to sell/short on Friday...
Well, as the rabbi said at the circumcision, "It won't be long now!"
Keith, you get it right more than most, so when you talk, I listen. I had a feeling it might do this today, but didn't have enough guts to go long this AM. Thought it would hover around the open and then perhaps jump within the half hour following the release of the FOMC statement. But, as I suspect is the case with many, I have to discipline myself to follow what the market does, not what I think it might do, even if it means missing a move occasionally. BTW, when things are this uncertain, cash is not a bad place to be. At any rate, I think the trend is up through Friday, but then who knows? The bears make a pretty compelling case for a protracted downturn, unless they are just promoting their already short positions. Question is, how much heat can they stand before covering?
Wow, walk away for 5 minutes to fix some lunch, and it pops 15 cents. Looks like everyone thinks they know already what Bernanke will say.
There may be an initial downturn if the FOMC statement hints at the possibility of more rate increases to come, but I think the professional PMs will not let it go too far so as to spoil their EOM/EOQ financials (i.e. "window dressing"). However, Monday may be another matter entirely (IMHO).
VTO Report... I thought maybe it was something with my browser, but I haven't been able to access "www.vtoreport.com" for several weeks now, so I guess it has in fact been removed (anyone know why?). The VTO system tracked the NDX and was all in at a 5 Day RSI of 30 or below, and all out at 50 or above, with trades conducted after hours on the closing price. Not sure why he chose to use the NDX instead of the Qs directly, since mathematically they give the same result. From my perspective, those were conservative entry/exit points, since the 5 Day RSI frequently goes to higher/lower extremes, and occasionally issues a repeat signal before changing trends. The comment at the bottom also conceded that the VTO system underperformed in strong up and down trends (i.e. worked best in choppy, trading range markets). Hope this helps.
2X, I believe you are right. If you subscribe to the "window dressing" theory re: EOM/EOQ financials, I don't think we will see the market head lower, if in fact it is going lower, before next Monday at the earliest. Intraday high on Friday might be the optimal time to short.
CSGCOS...
It seems from the message thread that CSGCOS is a rule-based system that represents the collective intelligence of many of the members here. I am sure it is in there somewhere, but could someone please point me to where the rules are delineated? Also, is someone tasked (or has volunteered) to be the keeper of the grail, or is it something that each person who is interested keeps, updates, and uses as they see fit?
Ken, what you may be looking for is "confidence interval". As an example, 8/10 would have a lower confidence than 80/100, although the percentage is the same. In other words, it all has to do with sample size. It has been a while, but any good Probs & Stats book should give you the formula for how to compute it.
MMO from Chris Johnson at Schaeffer, a good read, FWIW. Echoes what many hear have been saying.
"Technically, the market continues to hover near one-year highs, although some indices such as the Russell 2000 Index (RUT 753.83) have already surged into new-high territory. The small-cap RUT continued its assault on higher prices last week, continuing a trend of relative strength against the SPX, DJX, and COMP. Despite this recent strength, there appears to room overhead for even higher prices, as the RUT's short-term RSI remains below overbought levels. Also helping the RUT's outlook is the pessimism seen in options activity on the iShares Russell 2000 Index Fund (IWM 74.90), the ETF version of the index. As of Friday, the IWM's put/call open interest ratio remained in the top 20 percent of readings of the past year and appears ready to move higher.
Similarly, IWM's open-interest configuration reveals overly pessimistic options activity. The number of open April put contracts heavily outweighs the number of open calls up to the 76 strike, where open interest is so small that it is unlikely to interfere with the ETF's upward course. This type of open-interest configuration is normally a sign of continued short-term strength for the underlying stock. In the May expiration, there are a number of strikes that currently hold more calls than puts, suggesting that the intermediate-term outlook does hold some resistance for IWM shares. This resistance is centered around the heavy calls open at the May 74 strike.
Sentiment among many of our market-timing indicators continues to show increasing pessimism. The CBOE equity put/call ratio's one-month trend is enjoying a rapid short-term increase due to falling call volume while put volume activity has remained somewhat stable. This shift in activity, which is likely due to the upcoming FOMC meeting, reveals that investors are laying off the bullish bets ahead of the interest rate decision. From a sentiment perspective, the drop in call volume may be healthy for the market, as it tells us that investors may not be pricing the market to reflect an end to the interest rate hiking cycle. This increases the market's ability to continue a rally should the FOMC raise interest rates this week.
Another indication of this pre-FOMC pessimism is the fact that our Rydex Nova/Ursa ratio continues to creep closer to the low readings seen before the yearend rally in 2005. This market-timing indicator is closing in on the 0.16 mark, just slightly higher than the 0.14 reading seen last October. These low readings continue to suggest that investors are shifting their money from the bullish Rydex Nova fund to the bearish Ursa fund, indicating that there is a better chance that sidelined assets are growing. From our perspective, this is a positive sign as it identifies potential fuel for the short- and intermediate-term market. Investors will likely put this money back to work in the market after the FOMC situation has been resolved this week.
I discussed last week that Investors Intelligence numbers were beginning to see an increase in the bulls after the bears came within nine percentage points of the bullish reading. Well, we've now seen the first meaningful increase in the percentage of bulls (42.3 percent to 46.3 percent) since January 20. This increase in bulls indicates that the pessimism building in these poll numbers over the past two months is now ready to unwind, resulting in buying power moving into the market. Sidelined assets getting back to work should add some short- to intermediate-term strength to the market as long as the bullish and bearish percentages continue to diverge. One word of caution, though. Other sentiment polls that have seen the same pullback and subsequent rebound in optimism are already edging toward optimistic readings. The market could quickly go cold if the Investors Intelligence follow the same course over the next few weeks.
Wrapping it up, the market appears poised to push to new highs given that the FOMC doesn't throw any curve balls this week. Pessimistic sentiment is growing as the Tuesday meeting approaches, indicating that investors are not pricing a definitive end of the rate-hike cycle into current prices. The market should rally strongly on any indication that rate hikes will slow, as this pessimism will begin to unwind as buying power. Conversely, selling pressure will intensify should the FOMC continue its rate-hiking journey, though the selling will be somewhat contained due to the recent pessimism."
The biggest temptation has always been to try to predict what the market will do based on this or that outcome, indicator, or other bit of news, and I have to remind myself constantly of the fallacy and futility of doing that. Since no one has perfect knowledge of everything that will play into the equation, the predicted outcome becomes more of an educated guess (using TA, some might say SWAG!) than anything, and as our prognostications for which Ken has set up his tote board show so painfully, none of us are that good. So, while I would certainly *like* to know what the market will do in advance, as a practical matter I cannot with any degree of certainty, and therefore the best I can do is to try to understand it, and be prepared move quickly once the key indicators are showing what the market is actually doing.
CAD, as I said before, this is nice work, and you are very generous to share it with the rest of us. I think the extremely narrow trading range we have seen over the last couple of weeks echoes the below interpretation of the PCs for QQQQ, which is extremely plausible. However, the upcoming EOQ and the ensuing financials may remove some of the incentive for big block support at the current levels. That being said, what do you look for the signal of the impending breakout to be, and is your current position/recommendation cash or long?
Great post, CAD! I'm putting you on my "must read" list...
MVP, was meaning to ask you the rationale behind your waiting until ~ 3:30 pm ET on the day following your signal to implement.
Seems to be a lot of theories floating around as to what is holding this market up in spite of such bad fundamentals, but the one that makes the most sense to me is that now (and through next week) is a time that the big commercial money wants the market to stay high in order to make their EOQ statements rosier, and after next week, they will drive the market lower to refresh the cycle.
Seems to be a lot of theories floating around as to what is holding this market up in spite of such bad fundamentals, but the one that makes the most sense to me is that now (and through next week) is a time that the big commercial money wants the market to stay high in order to make their EOQ statements rosier, and after next week, they will drive the market lower to refresh the cycle.
Got it, and thank you very much.
Do your MVP sell/buy signals also imply going short/buying to cover?
Okay, found your website. Very impressive...
Thanks for sharing.
I concur with your view, i.e. it should not to be to see who can guess right the most (it is, after all, just an educated guess), but as a gauge or reality check on my own thinking.
So, if the short term sentiment, due to various conditions, i.e. oil prices, institutional money flow, interest rate outlook, professional traders, etc, is bearish, and the smart traders are in cash or short, what would be a good re-entry/cover level on the QQQQ?
I am new here, so please bear with me (no pun intended!).
Your system is very intriguing, and I have heard from more than one person that you get very consistent, profitable results. Is the RSI you use for your hourly system the 5 day RSI based on the last price traded for the hour just completed? In other words, do you track how the RSI changes hour by hour as the session progresses, and make your trading decisions according to these intraday values?
I think we will see prices erode for one or two more days before firming. Based on today's close, QQQQ 5 day RSI goes below 30 at $40.72. Currently in cash, look to go long at $40.72 or below, and average in over two or three sessions.
Always looking for ways to improve my trading. Where can I find more information on the MVP system?
Just as in business email, postings on these boards can fail to convey the *tone* in which a comment is offered, so you have to tread lightly when sending. Large egos are always a problem, so unless you know the person really well, what was intended as a lighthearted jibe can easily be interpreted as a snipe or criticism (but it is a two-sided problem, i.e. the intent of the sender and the sensitivity of the receiver). If more people would just remember that, I think fewer toes would get stepped on. And on the occasions when we honestly disagree, we need to agree beforehand (and I thought we did by our joining here), to disagree in an agreeable manner.
I apolgize in advance if I am speaking out of turn since I am new here, but for myself, I really *want* to see what others think the market or any particular trading vehicle might do *in advance*, mostly as a sanity check on my own thinking. I certainly think you have to stay committed to your own strategy, but strategies work best when they allow modifications to accommodate reality or changing market conditions. What works in a range bound market isn't necessarily the best strategy for an extended up or downtrend.
I certainly hope this doesn't devolve into the kind morass that so infests the CS board. Like you said, I guess some folks just can't play nice, and really do need adult supervision. Keep up the good work.
Direction of QQQQ???
Based on the modified 5 day RSI model I use, I think we will still see a move downward to support before we see a serious move upward to resistance or beyond. From yesterday's close, a price of $40.63 will yield an RSI below 30. Any move up in the interim would present additional shorting opportunity. In the past, it has not been unusual for a downturn to lag the sell signal by two or three days. A similar thing happended in the cycle which began with a sell signal on 2/27. It took 8 trading days for QQQQ to bottom at $40.52 on 3/9, with two intervening days (3/1 - 3/2) where the RSI was actually back above 60.
So, unless there has been a fundamental shift in market sentiment to break us out of the trading range, I think we will continue to see more of the same.
Okay, and thanks for the welcome, however, this concludes my 3 message limit for today, so I'll be in "read only" mode until tomorrow or the moderator lets me out of the newbie box.
Thanks, Ken, I'll do just that...
Been reading some on the trading strategies on the Yahoo link, and would like to find a good technique for implementing trades automatically (I still have another day job), especially when *low* volume is one of the confirmation criteria. I currently have an Ameritrade account and while their triggers let you do that to some degree, they are fairly limited in capability. Hari Seldon said some people here might be able to provide some insight or suggestions. I think I read that your strategy uses an hourly RSI indicator, but since I am not at the computer all day, I don't think that would work for me.
Just arrived (registered actually) from CS on recommendation by kenwong. I like what I see, but I'll be quiet now until I learn the ropes.