Sunday, January 31, 2010

Russell 2000 Weekly Model

Good night!

This weekend I want to show you the Russel 2000's ETF followers, because they have just thrown new signals.
The first one is the IWM ETF. This is a tracker of the Russel 2000 index:

This is the second sell signal after March/09 and the other indicators are with very similar values as the
first one. So, it's not quite clear the way this is gonna take in the next weeks.

Now see the leveraged ETF tracker (TNA):

TNA has also thrown a sell signal. Based on the stochastic oscillator and in the MACD I think that this is reliable signal. The only bull signal I see is the divergence of the prices with their volume. However, this divergence can co-exist several weeks with the prices sinking. What this might tell us right now is that maybe this won't be more than a correction in the prices..

Finally, the TZA is the leveraged reverse cousin:

Looking at the TZA follower I see that, altought the trackers have already thrown sell signals, the reverse one hasn't! This might be an important thing to consider before shorting the Russell 2000 (or going long in the TZA ETF). The stochastic oscillator is under a buy signal, confirmed by the MACD. However, since March/09 the TZA didn't throw any buy call when the IWM and TNA thrown a sell and the result was that those sells only lasted a couple of weeks. So, I think it's better to "hold your horses" and wait for a proper buy signal in the weekly TZA model before going long. That's what I will do for sure!

Trade safely,

Tuesday, January 26, 2010


Hello my friends,

Tonight I'm sharing with you my chart of the S&P500. There's still nothing new to say...the short term trend
is down and my trend follower is still on a sell, either on the weekly chart as in the daily one:

Right now, the index is in a position similar to the last 29st of October. I say this
because the daily stochastic oscillator is oversold and gettin' ready to lift the index
a little bit. But for that, the MACD divergence will have to give a little help! We'll
probably have a new down leg before that happen...

Have you already thought about the 2010/01/20?...this was probably the first day
of the downtrend's a cute date number's, don't you think?

Trade safely,

Monday, January 25, 2010

Elliot Wave counting attempt


Tonight I decided to try some Elliot Wave counting in the silver chart, only for the last visible leg. The result is this:

I'm only aware of some basic rules of this theory. I hope I haven't broken
any of them. There are some "exception" rules that I need to study more,
but I think this count is correct (only have doubts regarding the last abcde,
because I think some truncation may have happenned and wave v may be finnished).
This count blows if the SLV reaches 15.78...

Elliot guys...please comment :)


Saturday, January 23, 2010

Bear market might be back - Part II

Today's mourning I've posted about the S&P500 and showed you the latest sell signal.
My trend follower's performance on the S&P in the weekly and monthly charts is impressive,
so I take this sell signal as very reliable.

But first let's take a look at what happenned during the 2003 bull. Before claiming for a resume of
the bear market, I think it's safer and wiser to wait for more proof (and that proof is a sell in my
monthly trend follower!). So, look at the first 2003's bull weekly sell signal (as the one we got this week):

One can see that signal in March/2004 and, as today's, there was a sell signal in
the stochastics oscillator and the MACD divergence were dangerously approaching zero and going negative. But, that didn't mean the resume of the 2000's bear market! And by that time the Elliot guys were also claiming for a new cathastrophic down wave...right now I'm skeptical about the P3 start and
waiting for that confirmation.

Well...let's see the monthly performance of the trend follower on the S&P:


The result is that starting with $50.000 today the cash value is $2.375.000.
This is achieved trading without short calls and with no money management
besides profit reinvestment. I'm also considering $13 per trade.

Trade safely,

And when it "fails"...


Tonight I wanna show you my trend follower applyed to the PSI20(weekly).

Recall my last post about the PSI20 when the follower was throwing a buy signal ( I wrote this:

"I'm showing you this right now because last week the MTF provided a new buy signal. However, from a technical standpoint I don't think things are already settled. An this is mainly because the MACD divergence  is still negative (but growing) and the stochastic oscillator ended this week in a sell. A conservative investor  should hold some more time to buy."

This week ended proving me right. Although the follower throwed a buy signal, it ended this week throwing a sell signal! This trend follower is very nice in a way that provides traders some "intrinsic stop loss" mechanism.

More important than knowing when to buy, a trader must know better when to cut the losses. Before entering any trade one must be prepared to accept some maximum level of loss and follow religiously that level
in case the price goes under it.

Trade safely....always!

Bear market might be back


This week I haven't been with much will to post here. However, this has been a very important week in the definition of what might be in place for the next ones.

See here the weekly S&P500 chart. For the first time since the mythical 2009'S March bottom, the trend follower is generating a sell signal!

The way I see it, this may very well be the resume of the bear market. The one that may take us to the a new economical depression era.

Going back to the 1929's crash, let's see what happenned:

The crash hit the Dow Jone Industrials in Sept/1929 and went through Nov/1929.
Then a rebound occurred until April/1930. In that month, the trend follower throws
a sell signal. What happens next is this:

...nothing more than two years with a bear market in place.

Now it's time to get away from the market or enter short.

This is one of those times when I'd rather be wrong than right.
If I'm wrong better...if I'm right...prepare yourselves to pay the bill for
years and years of capitalism and greedy.

Trade safely.

Monday, January 18, 2010

Screening Stocks

Hi there.

Today I'm writing a simple stock screener. This will help me to don't spend much more time in the boring task of finding stocks with those events that trigger buy and sell calls.

I already have my list of "favourite" titles to trade. I also have an efficient trading system. Now I have too an automated tool that will find events that trigger my system calls. The next step would be to connect my broker
with the trading software I'm using...maybe lately.

In the next days I will show some results of my screener.

Regards and trade safely.

Sunday, January 17, 2010

PSI20 Weekly/Daily

Hello fellows!

As you may know I'm from Portugal and our stock market index is called PSI20. I never traded any stock from this index and I don't know any ETF that tracks in any way our so beloved's pitty...

Let me show you the weekly chart (to the monthy one there's nothing to say...yet)

In the top of the chart you can see the performance of my trend follower (MTF). Notice how it handled
the 2008's bear market! Ohhhh if only I had this follower already developed by would have saved me from some nightmares :)

I'm showing you this right now because last week the MTF provided a new buy signal. However, from a
technical standpoint I don't think things are already settled. An this is mainly because the MACD divergence
is still negative (but growing) and the stochastic oscillator ended this week in a sell. A conservative investor
should hold some more time to buy. Maybe buy if the daily chart is under a buy signal:

As you can see, the daily chart is still under a sell signal and there's some evidence that this one may
be here for some days. The MACD is curling under it's signal and the stochastics is on a sell. In October/09
happenned something similar as one can check.

So, what does this tell us? This tells us not to trust the last buy signal in the weekly chart. At least not right now! The MTF in the weekly chart has been providing an impressive performance, but the timming to buy
a weekly signal must be always checked against the respective daily chart. This is very important in order
to get the most out of a long trade.

Just for the fun, take a look at the performance of the MTF in the weekly chart:

This is a 122% return since March/1998 (more or less 10% profit per year) and being only 53% of time in the market.
If you pay attention this is a very good profit rate, because since 1998 two bear markets were in place and we still didn't see new highs since the 2000's top.

Trade safely,

Thursday, January 14, 2010

EWZ Weekly

Hi. Today I'm posting about EWZ weekly chart.
EWZ is a ETF that follows the Brazilian Bovespa index:

This weekly chart is currently in a very dangerous position, mainly because of the MACD
curling to negative divergence! The last time this happenned lead to a big massive bear
market! Apart from that evidence, the weekly MACD curling is always a big alert that
a downtrend in happening or will happen...for sure!

Also, the stochastics oscillator is under a sell signal and the only thing keeping this bull is the
RSI being over 50 points.

My trend follower didn't throw yet the sell signal but, if I owned this ETF, I would be selling it.

Notice the last top was done by the end of November/2009 and I really doubt the EWZ will
make a new top in the next few weeks, because of the MACD and the stochastic oscillator sell
signals. These are two powerful and reliable sells.

...And look on the performance of my trend follower since June/2008 :)


Wednesday, January 13, 2010

S&P500 Monthly

Hello. Tonight I'm bringing you the monthly chart of the S&P500 index.
These are dificult times in the world (of course, not for our so beloved politicians and their big lobbies...).

While the world sentiment is currently very bullish (over 80%), almost all Elliot Wave followers claim for a big cathastrophic wave that will bring the S&P500 towards the 300 zone (not only the S&P, but the stock market in general...for me decoupling is a myth if the US guys go to the floor!...let's wait and see. Personally, I don't find fundamentals in the economy that support a new refreshed bull market. Mainly because the unemplyement rate all over the world is very large! Twice that of 2003!

Now let's see the chart:

Let me start by saying that, right now, besides being a bear fundamentally, when I see this chart, I'm a bull technically. This chart allow us to see the following regarding current date:

  .RSI over 50 (this has been a very bullish sign)
  .MACD is still very bullish having no reversal values so far since March/2009
  .Volume doesn't look that bad
  .Stochastics oscillator is the overbought zone, but still with no sell signal (here we have to ignore the last bar
   because it belongs to the current month...).
  .My trend follower is still rising, being the first sell zone near the 1060 level
  .The only bear signal I see is the linear regression that follows the monthly candles, because it's showing
   some kind of exhaustion in the prices.

Checking this conclusions against the 2003 bear/bull reversal, I would say that, technically, the S&P is kicking bears' ass, although revealing some weakness already.

The weekly chart is better showing the current exhaustion, so I guess a big correction (at leat) has it's time schedulled to start in very few weeks. If it will lead to the so-called cathastrophic wave, is too early to say.



Tuesday, January 12, 2010

SLV in danger?

Good night!

Take a look at the following chart and notice the breakdown of the short term trend follower line.

This is a daily chart and there are some things to
pay attention to:

1. Stochastics oscillator is in the sell zone (bear)
2. MACD has positive divergence, in spite being less than yesterday's value (bear)
3. RSI still in buy zone ( over 50 - bull )
4. Today's volume appears to be lower that yesterday's one, so I guess this isn't bear...yet
5. Linear regression didn't invert yet (bull)

Based in this and in the fact that the weekly chart is still bullish, my expectiation for now is that last week's movement is now being corrected. I would say that, in the worst case, the 61.8% Fibonacci level (17.2) will hold this correction. If not bulls may be in trouble!

Sunday, January 10, 2010

First charts


The first charts I'm showing are related to silver (SLV).


My trend follower had issued this week a new buy signal in the daily chart. Let me beggin to explain what all those lines mean.

The main area of the picture is the candlestck price chart of the SLV ETF. Then I have a green/red line and another blue/black one. These are the two lines for my trend follower system:

1. Green/Red line: my long term trend follower;
2. Blue/Black line: my short term trend follower.

The buy/sell signals shown are triggered only by the longer one, while the short term is pictured only as an auxiliar view.

In the top you can see the backtest results generated by my trend follower, as cold as it can be. I mean, there is no capital management, nor stop losses...anything....only buy/sell 100% of the current cash (it's only included the trading costs). Because this is a daily model, the buy/signals are programmed to be issued in the next day openning of the market, so they are actually based in the previous day close!


The weekly chart is very interesting. Pay attention to the first week shown! This was almost right before the 2008 bear market start. This system generated the sell call in late March of 2008 and the very next buy call was only issued in the first week of February/2009! This is amazing, as in the weekly model, my trend follower has some kind of a stop loss management.

The weekly results for SLV are better than the daily ones. This is a nice catch, because it minimizes the trade operations frequency, providing better trade eficiencies! This is very important to traders like me that only use EOD data and only buy/sells when the market is sleeping :)

Finally, let me point out that the 6 january buy signal provided by the daily model is confirmed by the weekly chart. This is a very important check in order to reduce the risk associated with each trade call.

Another check I use to do is against the longer term stochastic oscillator (in this case the weekly one). As one can see, it is right now in the buy zone so, even if you only buy the SLV tomorrow, it should provide a nice profit oportunity.


Tuesday, January 5, 2010

Disclaimer Post

Good night!

I'm starting this blog in order to share with all you the evolution of my trade system (wether it goes up or not!).

This system is NOT intended for real time trades, nor real time investors. It was developed by me to me only and its goal is to find tradable trends for long term investors like me. "Long" here means NOT day traders. So, to do this, I will only share my daily, weekly and monthly charts. I will try to post daily charts on a day-to-day basis, the weekly ones will be shown in the weekends and the monthly ones after each month ending.

My first system is based in ATRs (AverageTrueRanges) and, after this one is completed, I will start working on a more exotic one, based in neural networks for price prediction (again, NOT to real time prices).

In the stock market the hard thing isn't properly the definition of a system. In my point view the hardest thing is to use our system's signals and trade them.

Just for an idea, the charts I'm following are basically these:

 .Russel 2000: IWM, TNA, TZA
 .Sensex: INR
 .Bovespa: EWZ
 .Commodities: GLD, SLV

Finally, I hope this place becomes a home in the future. A home where people can share thoughts, ideas and knowledge.

Let's do it!