Thursday, July 22, 2010

Power trend

Just a quick update. We had a big up day as i posted yesterday. My trendicator has entered a power trending mode now.

Here' some quick details on what a power trending mode means. Power or strongly trending markets are those, where the odds of sucessfully executing a countertrend swing trade becomes extremely low. It does not preclude one from intraday countertrend trades or quick scalps, but is unforgiving when it comes to trying to swing against the trend. Power trend does not measure the size or duration of the move. The move could run for months or end even after a day. It just attempts to charaterize a trend which is in a high momentum zone. So it pays to wait for a potential CIT or actual CIT before any countertrend swing is attempted from this mode.

Wednesday, July 21, 2010

No change

The action on the hourly charts today was ugly, but my trendicator failed to produce either a sell signal or a CIT warning. I would have at least expected a CIT with this kind of action. But surprisingly, i did not get one. So the trendicator remains on Green. If the trendicator is right, we should get a huge up day tommorow. If not.... :-)

Tuesday, July 20, 2010

Daily buy signal

The signal changed today from strongly downtrending to uptrending, without a CIT warning. Not surprising, given that we had a key reversal day on the daily charts. The next upleg has begun....

NAV trendicator

Here's a visual look at my system. My system uses no cycles, e-wave, astro, magic numbers, support, resistanace, Fibonacci or for that matter even interanls (breadth, vol, high/lows), Put/Call, VIX, fundamentals, news, earnings, bull market, bear market, cyclical/secular trends et al. It is based on purely price action, price trending rules and price based momentum. Price trending rules and momentum rules are used to charaterize the trend into different phases as

1) Trending
2) Strongly trending (power phase - no countertrend trading should done in this phase)
3) Downtrending
4) Strongly downtrending (power phase - no countertrend trading should be done in this
5) Potential CIT (Change in trend) => At this point, trend traders should take profits or tighten their stops and swing traders start probing positions against the trend.

Last but not least, this is not a curve fitted system (which are dime a dozen in this industry), with optimized parameters to make the past look good. The system only attempts to characterize the trend and not optimize the buy/sell points. No it won't pick the exact bottom and top tick, if that's your obsession. You would miss one or two candles at the top/bottom. The system also does not have a vision for the future . Consequently, it does not attempt to guess the amplitude of the move or the duration of the move.